The LIFT Scheme and How You Can Use It To Buy a Home
17 September 2021
Many first-time buyers could benefit from a little support to help them tale their first step onto the property ladder. It’s great to know that help is out there!
Murray Souter, mortgage adviser, explains everything you need to know about using the LIFT scheme to purchase your first home in Scotland.
What is the LIFT scheme?
The Low-cost initiative for First Time Buyers (LIFT) is a Scottish Government, shared equity arrangement which has helped more that 12,000 people purchase a home.
There are two LIFT schemes: Open Market Shared Equity (OMSE), and New Supply Shared Equity (NSSE).
The OMSE scheme is for buyers who cannot afford the full price of a house in the open market. The NSSE scheme allows buyers to purchase a new-build home from a housing association or local council. Both schemes are open to both first-time buyers and certain priority groups across Scotland with low to medium incomes.
How does the LIFT scheme work?
Buyers purchase the bigger share (usually between 60-90%) of the property, and the Scottish Government contribute the remaining cost. For example, if you pay 85%, the Government will pay the remaining 15% and hold this under a shared equity agreement with you. You will still be required to have a minimum 5% deposit to add to the mortgage and Government share.
You will have complete ownership and the same responsibilities as any other homeowner, including mortgage payments, council tax and insurances, as well as any other costs associated with the purchase.
If you choose to sell the property, the Scottish Government receives a share equivalent to the original contribution, ie., if they paid 25% of the purchase price, they would receive 25% of the sale price, even if that figure is greater. In most cases, you can increase your share during your ownership, with the option to own your property outright, meaning the Scottish Government will no longer have a share.
A minimum threshold price applies to buyers using the OMSE scheme, with different thresholds across Scotland.
How can you apply for the LIFT scheme?
The application process is different for both LIFT schemes, but all the information can be found on the Scottish Government website.
Mortgage advisers can discuss your application with you, and help you find the most appropriate mortgage for you.
For the OMSE scheme, successful applicants will receive a ‘passport letter’ with your threshold price. You’ll need to check that your mortgage lender offers mortgages for LIFT buyers, but your broker can advise you on this.