Shared Equity Explained
Shared equity – is really a form of shared house purchase. The buyer buys all of the property with mortgage funds obtained normally but also with an amount of cash provided as an interest free loan provided by the government. An agreement is entered with the government which includes eventual repayment of the government’s funds – usually on a sale of the property. Typically if the government provides 20% of the purchase price – it will be entitled to receive back 20% of any future sale price.
With those LIFT schemes where private builders are involved a builder and the government may well be entitled to a share on sale also. For example the scheme might have involved the builder providing 10%, and the government 10% - on a future sale of that property each would be entitled to repayment of that share. Where a developer is involved usually the funds can only be borrowed for up to ten years. Buyers under these schemes would have to repay in that time.
Applications under LIFT schemes
Lift schemes are designed primarily to help first time buyers with moderate incomes – although in certain limited situations non first time buyers may apply. Applications for LIFT funds are administered by social landlords (usually housing associations) on behalf of the government. All applicants are expected to secure their own mortgage funding to help with the purchase – and if they have savings to commit part of these also. Basically where savings are held 90% of any amount over £5000 would have to be committed to the purchase.
Buyers under LIFT may sell at any time with the LIFT percentage being repaid. You cannot transfer your LIFT loan to a new property.
Phone one of our consultants to obtain a LIFT application form and all necessary information to get an application under way.