The Parc Shared Equity Scheme is a new shared equity scheme following in the footsteps of the highly successful LIFT initiative supported by the Scottish Government. The Parc Shared Equity Scheme is funded by The City of Edinburgh Council.
The Scheme offers first time buyers, those in rented accommodation, key workers, returning army personnel and those with a connection to the Craigmillar area the opportunity to own their own home with the help of an equity loan from The City of Edinburgh Council. The Scheme means that you, the buyer, will only have to put down a minimum 5 per cent deposit on the purchase price of your new home rather than the average 25 per cent deposit. The balance of the purchase price of your new home will be met through an equity loan from the Council who will fund up to 20 per cent of the purchase price.
Many shared equity incentives offered by developers are normally set for a fixed period of 10 years, after which the company will look for its share back, but those eligible for a ParcLife home under the new scheme, will have up to 20 years to return the money.
Questions & Answers
What share of the property will I be buying?
You will be purchasing 100% of the property. You will be required to fund a minimum of 80% of the purchase price usually by way of a mortgage(including a minimum 5% deposit) the balance being funded by the Council through their equity loan.
How much of a deposit will be required?
In order to qualify, you will be required to have a minimum 5% of the purchase price, as a deposit.
Can I use Shared Equity along with one of the special offers or incentives?
No, shared equity is not available in conjunction with any other incentive or offer.
What other costs are involved?
You will be responsible for legal costs, stamp duty land tax (where applicable) and any fees in relation to your mortgage including survey fees. You will also be responsible for all maintenance, repairs, insurance, service charges and factoring costs and utility payments for your property as well as your mortgage repayments and Council Tax.
Who will qualify for the Scheme?
The Scheme has been put in place to help purchasers overcome the problem of finding the high deposits being requested from mortgage lenders at this time. A full list of criteria has been produced and includes first time buyers, those in rented accommodation, key workers, returning army personnel and those with a connection to the Craigmillar area.
How do I know if I qualify?
After identifying the property of your choice, you will need to be qualified by an Independent Financial Advisor on the basis of the criteria outlined above. After qualification is verified you will be contacted by one of our team to advise you of the result within 7 days.
How do I reserve a property?
You will be asked to complete a Shared Equity reservation form that relates to your property. A non refundable reservation fee of £250 will be paid at this point. The reservation will be treated as part payment to the full purchase price.
Will there be any additional deposit to pay?
Yes a 1% deposit will be required on conclusion of missives which will also be treated as part payment of the purchase price.
Can I buy out the remaining 20% equity?
Yes, the 20% equity can be increased at any time. You can increase your equity stake either by one single stake (20%) or up to a maximum of four stakes (the minimum stake increase being 5%. If it is increased within the first 7 years then the equity stake purchase price will be based on the original purchase price. The equity stake will ultimately need to be bought out within 20 years. From years 8 to 20, the redemption figure for the 20% equity stake will represent the open market value at any given time.
What happens if I sell my property?
In this instance, assuming you have not already bought out the 20% equity stake, the equity stake would be paid back at time of re-sale from the proceeds.
Do I pay a rent on the 20% equity stake?
No rent is payable on the 20% equity stake.
Do I pay interest on the 20% equity loan?
No interest is payable on the 20% equity loan for the first five years. After that interest is charged at a fixed rate of 2%.
What do I have to do to receive the equity loan?
You will be required to enter into a variety of legally binding agreements with Council to protect the Council’s interest in the equity loan which include a standard security over the property as security for the equity loan.
Will I be able to rent out the property?
The property MUST be your prime and only residence.