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Help to Buy Scotland

13th February 2021

By Ben Walker

Help to Buy in Scotland

There are Help to Buy schemes for each country in the UK. This guide will explore Help to Buy Scotland. Read on to discover how it works, and how you can apply for it.


How is it different?

The main difference with help to buy Scotland is the size of the equity loan on offer from the government. The maximum equity loan available in Scotland is 15%, up to a value of £200,000. However, in both England and Wales, you can get an equity loan of 20%. As well as this, the maximum value in England is £600,000, whereas in Wales it is £300,000. On the other hand, the Scottish equity loan is interest free across the term, whereas both the England and Wales loans start to gain interest on year 6.

How help to buy in Scotland works

There are two help to buy Scotland schemes that work in the exact same way. The first is the Affordable New build Scheme, and the second is the Small Developer Scheme. There is only difference in eligibility. For more information go to the Scottish Help to Buy website.

The Affordable New Build scheme will allow first time buyers in Scotland to buy a new build home at a discount. You will have to be able to pay for 85% of the value of the property. This can be the deposit and the mortgage combined. So, if you pay a deposit of 5%, you will only need a mortgage loan to value ratio of 80%.

However, whilst in this agreement you will have complete title to your home. This means that you’ have full responsibility for you home. This will include paying your mortgage, various insurances, repairs and maintenance, council tax and more. If you want to increase the share of the home that you own, it is possible to “staircase” your equity share. You will have to buy shares in a minimum of 5% at a time, until you fully own your home.

Are you eligible

Firstly, you must be buying a home in Scotland that is worth less that £200,000, and from an approved provider. Secondly, you must be providing a 5% deposit, and be taking out a repayment mortgage of at least 25%. However, the combination of your deposit and your mortgage must be 85% of the property value. Thirdly, you must not own any other property. If you are an existing homeowner, you’ll have to sell your home to be eligible for this scheme. Finally, if you are applying alone, your mortgage must not be more than 4.5 times your annual income. If you are a couple, then it must not be more than 3.5 your joint annual incomes. The montly mortgage costs must also not exceed 45% of your net disposable income.

These mortgage multiples can be a Challenger for some people getting on the property ladder so the help of a broker may come in handy.

How to apply for help to buy Scotland

The first step is to reserve your home. This is done by getting a “reservation agreement” from the builder, which may require a fee. From there, you then have to go through your local administering agent to apply for funding. Provided you qualify, you’ll then be sent “Authority to Proceed”. You can only apply for your mortgage once you have “Authority to Proceed”. Subsequently, once you have all of this, you will be able to pay your builder, and then move in.

For a list of registered builders, visit Help to Buy Scotland

Repayments

There is no deadline for the equity loan to be repayed by, with the homeowner able to pay of some or all of the loan. However, in some circumstances, the equity loan must be repayed in full. For example, when the homeowner decides to sell the house. In this situation, whatever percentage of the property the government still owns equals the percentage of the sale fee that must be paid back.

If you are unsure about how to proceed, or need more information, get in touch with an expert Promise Money advisor today.


Talk to a Promise Money adviser for more details


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