What is Help to Buy?
Help to Buy is a Scottish Government scheme to help first time buyers and existing homeowners to purchase an affordable new build home, with a minimum 5% deposit, from a participating home builder. The Scottish Government will help buyers to purchase a property by taking an equity stake of up to a maximum 15% of the value of the property.
There are some exclusions, such as if you have any buy to let property or second home. For full terms and conditions please speak to our Mortgage Advisor.
Am I eligible?
The Help to Buy Scheme is open to both first time buyers and existing homeowners seeking to buy a new-build home from a participating home builder.
What homes can I buy?
The scheme is only available on new build homes from participating home builders and on homes up to a maximum value of £200,000 for purchases on or before the 31st of March 2021.
What deposit will I need to provide?
Your mortgage lender is likely to require you to contribute a deposit of around 5%. Your mortgage and deposit must cover a combined minimum of 85% of the total purchase price.
What financial assistance will I get?
The Scottish Government will help buyers to purchase a property by taking an equity stake of up to a maximum 15% of the value of the property. No annual interest will be charged on your equity stake. The Scottish Government’s equity stake can be repaid at any time and is based on the value of the property at the time of the repayment.
In all cases, you will be expected to maximise your contribution to a reasonably affordable level.
How Do I Apply?
Our independent financial advisor, Peter Bruce, is an expert in new build mortgages and Help to Buy. He will let you know your borrowing capacity based on income/expenditure taking into account what level of mortgage payment is comfortable for you.
He will go through all fees associated with the purchase such as LBTT, solicitors costs, removal costs as well as product fees and early redemption charges associated with your mortgage.
He will take you through a step-by-step guide from obtaining a decision in principal, reserving a property, full mortgage application, instructing solicitors and finally what happens at completion.
What happens if my application is successful?
If you are eligible to participate in the scheme, you will receive an ‘Authority to Proceed’ from the agent assessing your application. Your independent financial advisor will then be able to submit a full mortgage application on your behalf.
The ‘Authority to Proceed’ will be accompanied by instructions to your solicitor. Your solicitor will advise you on the legal documents that you will be required to sign.
Your solicitor will check that your mortgage offer, property price and available funds are all consistent with the terms of the ‘Authority to Proceed’. Your solicitor will advise you of your legal rights and obligations.
At the completion stage, your lender will provide its funds and the Scottish Government will makes its funds available. Your solicitor will then use the mortgage funds, Scottish Government’s funds and any deposit contributed by you, to pay the house purchase price to the selling home builder and will settle the purchase. Once completion has taken place, you will be able to move in to your new home.
What Are My Responsibilities As A Shared Equity Owner?
When you buy through the Help to Buy (Scotland) Affordable New Build Scheme you own the property outright – you will have full title to the property.
Like other home owners you will be responsible for all maintenance, insurance and repair costs, as well as making your mortgage repayments and paying Council tax to your local authority. You will be responsible for keeping your property in a good state of repair.
You will need to take costs of this nature into account when assessing whether you can afford to buy a property and should therefore seek more detailed independent financial and legal advice on the responsibilities that come with being a home owner in relation to any particular property you select and all documentation which you will require to enter into.
How Can I Purchase Additional Equity In My Home?
You will have the option to increase your equity share by a minimum of 5% of your home’s prevailing market value in any one year – whether that value is more or less than when originally purchased. You may increase your share up to 100% if you choose to do so.
What Happens If I Want To Make Improvements To The Property?
You cannot extend or improve your property without first receiving written permission from Scottish Ministers.
The scheme is designed to help people move up the property ladder. You should therefore consider repaying part or all of the Scottish Government’s equity share before making plans for improvements or alterations.
What Happens When I Want To Sell My Property?
When you sell your Help to Buy (Scotland) Affordable New Build Scheme home (unless you have chosen to repay your equity loan earlier) you must repay the assistance you received from the Scottish Government from a share of the sale proceeds.
Where can I get more information?
For full information on the scheme, visit the www.gov.scot/htb website, where you can download a comprehensive information leaflet for buyers.