What is Help to Buy (Scotland)?
The Help to Buy (Scotland): Affordable New Build Scheme, to give it its full name, offers interest-free equity loans of up to 15% of the value of a new-build home.
You'll need to have saved a deposit of at least 5% and you can then add the equity loan to the amount you're putting into the property, meaning you only have to take out a mortgage for the remaining 80% of the property price.
This will give you access to better deals than if you were taking out a bigger mortgage.
Originally launched in 2016 with the aim of running for three years, the scheme has now been extended for a further two years and will run until March 2021.
Which? Mortgage Advisers can advise on Help to Buy mortgages and find the best deal for you.
What kind of home can I buy?
You can only use this scheme to buy a new-build home.
The maximum value of the property you can buy is £200,000, and the purchase needs to be completed on or before 31 March 2021.
A home purchased using Help to Buy (Scotland) must be used as your main residence, so if you're looking for a buy-to-let investment this scheme isn't right for you.
Find out more: buying a home in Scotland
Applying for Help to Buy (Scotland)
To buy a home using Help to Buy (Scotland), you'll need to follow these steps:
- Get an accurate understanding of how much you can afford, ideally by talking to a mortgage adviser.
- Contact a participating house builder and view a show home.
- Speak to an independent financial adviser, who will put you in touch with one of the agents that administers the scheme.
- Request a Help to Buy (Scotland) application form from the agent.
- Reserve a property and obtain a reservation agreement.
- Submit the application form to the agent and await a decision.
Find out more: new-build homes – expert advice on buying a brand-new property
Repaying the loan
There's no set deadline but, while you're paying it off, you will be limited in what you can do with your property.
There are strict rules about improving or extending homes bought using Help to Buy (Scotland), so if you wish to carry out any work you'll need to receive written permission.
The government is generally reluctant to allow changes that will increase the value of the property, so there's a good chance your request will be denied.
Can I increase my share?
You can increase your share of the home by buying up chunks of the government's stake. This process is often referred to as 'tranching up'.
You don't have to tranche up but if you do want to, you'll have to buy at least 5% back in a year. Bear in mind that you'll be buying the equity at market rate, so you'll need to have a valuation done before purchasing.
Low-cost initiative for first-time buyers (LIFT) scheme
If Help to Buy isn't right for you and you haven't owned a home before, you could consider buying a home using the Scottish government's Low Cost Initiative for First-Time Buyers (LIFT) scheme, which is split into two parts.
The Open Market Shared Equity scheme (OMSE) allows first-time buyers to purchase a stake of between 60% and 90% of a property for sale on the open market with a modest deposit.
The New Supply Shared Equity scheme (NSSE) works in a similar way, although it's limited to new homes and buyers will usually purchase a stake of between 60% and 80%.
Priority is usually given to social renters, members of the armed forces and disabled people.
If you're interested in buying a home using NSSE, you can search for a project in your area on the Scottish government website.