First-time buyers may soon find it much easier to buy their first home, thanks to a new government scheme to provide loans of up to £25,000 towards a deposit.
But, before you start eagerly searching for your first home, you should be aware that the scheme is only for properties being bought in Scotland.
The new scheme, which hasn't been named yet, will help first-time buyers get on the property ladder in Scotland.
The loan will be secured on the equity of the home, and can be paid off at any time. At the latest, it must be repaid when the property is sold.
The Scottish government has earmarked £150m for the scheme, which equates to 6,000 people receiving £25,000 loans. However, at this stage it's not clear how many people will qualify for the top amount, or whether more buyers might be helped with smaller loans.
The scheme is due to begin later this year, though no official launch date has been announced. It's due to run until the end of Parliament in May 2021, which could mean it will be around for just 18 months.
There are several details about the new scheme that are still unclear.
When Which? contacted the Scottish government, a spokesperson reaffirmed funding for the scheme, but declined to answer any specific questions on eligibility, or details of how the scheme will actually work.
This means that there is still a question mark over how the scheme will work, including:
The table below shows how the two schemes compare on some of their shared features.
|Feature||New first-time buyer scheme||Help to Buy (Scotland)|
|Loan type||Cash loan||Equity loan|
|Paying back the loan||Must be repaid when property is sold, but can be paid in full at any time before that||Repaid when you sell, or you can increase your equity in 5% steps beforehand|
|Who is eligible?||First-time buyers||Those buying a new-build property as a main residence|
|Maximum property value||No limits confirmed||£200,000|
|Minimum deposit required||5%||5%|
|Closing date||May 2021||March 2021|
Help to Buy Scotland was first launched in 2016, and is due to close in March 2021. So, there will be a two-month period when the new pilot scheme is the only option for first-time buyers seeking a government loan.
It is only offered to those buying new-build properties as their main residence, there are maximum property values in place, and the amount you'll have to pay back may be different to how much you borrowed, as it depends whether the property increases or decreases in value.
The new pilot scheme could offer more flexibility.
For one thing, it's not restricted to , and it's been reported that there'll be no age restrictions on first-time buyers wishing to apply, and no maximum on the price of the property you put the loan towards, though this is yet to be confirmed.
The fact that you're taking out a cash loan, rather than an , could also be an advantage. You'll only ever need to repay what you've borrowed (plus interest), and you won't be penalised with a bigger bill if your property increases in value.
However, while you can repay the loan at any time, wording suggests that you can only do this in full.
For first-time buyers who struggled to get a deposit together in the first place, it may be a challenge to save a further £25,000. , on the other hand, accepts 5% equity payments, which may be a bit more manageable.
In her closing speech at the SNP Conference a couple of days ago, First Minister Nicola Sturgeon pitched the scheme as a way to take the pressure off the '', and those struggling to save for a deposit.
'Even on decent incomes, saving for a deposit takes so long it has become a distant dream,' she said. 'In a fair and equitable country that cannot stand. And so we will act. We will help young people with the deposits they need.
'If buyers can find just 5% of the value of their new house from their own funds, we will do the rest.'
According to the latest Land Registry data, first-time buyers in Scotland are looking at an average price of £118,210 - a figure that's only marginally higher than last year.
That's because first-time buyers don't have to pay any LBTT on residential properties up to £175,000, well above the average price first-time buyers tend to pay in Scotland.