Help to Buy Scotland

Posted 30 December 2016 by Amber Warby

What is the Help to Buy Scotland scheme and how does it work?

Help to Buy (Scotland) Affordable New Build Scheme was launched in March 2016 (alongside the Help to Buy Scotland Smaller Developers scheme, which is run in exactly the same way). 

An additional £100 million will be provided in to Help to Buy (Scotland) from 2019 to 2021, meaning that approximately 18,000 new properties will be purchased through this scheme.

The government offers a five-year interest-free equity loan of 15% to those looking to use Help to Buy in Scotland, on properties with the value of £200,000 and lower. With this, you would only have to provide a deposit of 5% of the property value. With 20% covered, you would have to find a repayments mortgage for the remaining 80% of the cost. In order to make sure the new home is affordable to the buyer, strict means testing will take place to show that the mortgage required will equate to no more than 4.5 times your income if you're single or 3.5 times your combined income if you're a couple.

Once the five-year interest free period has ended, an interest fee of 1.75% will be added to your monthly repayments of the loan.

The Help to Buy (Scotland) loan lasts 25 years maximum and once you sell your property, you must provide the government with 15% of the current property value. If the property value has increased, it is important that this is taken in to account.

The home that you purchase through Help to Buy (Scotland) must be the only property that you own and this must be your personal place of residence. Any property purchased through Help to Buy (Scotland) must not be rented out. Only government approved housebuilders and lenders can part-take in the scheme. Some available Help to Buy (Scotland) lenders in Scotland are:

Glasgow Credit Union
Leeds Building Society
Virgin Money
Lloyds Banking Group
Leeds Building Society

Working example

Property price £200,000 (100%)
Initial deposit £10,000    (5%)
Equity loan     £30,000    (15%)
Remaining mortgage  £160,000    (80%)

Useful links

Search Help to Buy

What is a Help to Buy ISA? 

The buying process Q&A 

Two-year or five-year fixed-rate mortgage?

10 mortgage questions to ask 

Repaying your Help to Buy equity loan 

How to use your equity to help your kids buy a new home 

What you should teach your kids about mortgages and borrowing

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