Help to Buy Scotland

Posted 30 December 2016 by Keith Osborne

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). With this scheme, homebuyers are required to put down a deposit of 5%, with the government providing an equity loan of 15%, leaving the buyer to find a mortgage for the remaining 80% of the property price.

Working example

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

The scheme is set to run for three years and maximum price of a property you're allowed to buy with the scheme varies from year to year: if you buy a house before 31 March 2017, the upper limit is £230,000; then until March 2018, the upper limit is £200,000; then until 31 March 2019, the upper limit is £175,000. These dates refer to the time the house sale is completed, not reserved. This scheme has a limited budget so the earlier you apply for it, the better.
The home must be your only home, be used as your main residence and cannot be rented out.
Only those housebuilders who have been approved by the government can take part in the scheme. Likewise, only certain lenders have been approved. These are currently eight participating lenders:

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

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.
The process of buying a home through Help to Buy Scotland is generally as follows:

  1. Search for a new home from a housebuilder who's taking part in the scheme.
  2. Contact a mortgage broker or financial adviser who can then put you in touch with the appointed Help to Buy for your area.
  3. Ask for a Help to Buy (Scotland) Affordable Homes Scheme application form.
  4. Reserve your desired property.
  5. Submit the application to the local agent and then wait to see if your application is successful or not.

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