Read our guide to Scotland’s home buying schemes including Help to Buy and Shared Ownership, and see if you can buy your own home using one of the schemes.
- Help to Buy
- New Supply Shared Equity (NSEE)
- Open Market Shared Equity scheme
- Shared Ownership
- Your next step
Help to Buy
The Scottish Government has announced the Help to Buy scheme will be extended until March 2021.
Help to Buy (Scotland) is a shared equity scheme aimed at helping both first-time buyers and home movers buy their new build home.
Help to Buy (Scotland) is made of up two schemes. The Affordable New Build Scheme available to larger homebuilders and the Smaller Developers New Build Scheme for smaller home builders and is available through participating builders.
The agents administering the schemes will identify which scheme your application will be processed under.
The rules covering the two schemes are identical:
- You must have a deposit of at least 5%.
- Your deposit and mortgage must cover a combined minimum of 85% of the purchase price.
- The Scottish Government will as a result take a stake of up to 15% of the purchase price holding security over this proportion till you own your home outright.
- The mortgage must be a repayment mortgage of at least 25%. This cannot be an interest-only first mortgage.
The maximum threshold for the value of the property depends on what year your application is completed:
- 2018/19 (completed on or before 31 March 2019) £200,000.
This scheme is only available to those who are unable to afford to purchase the property without the Government purchasing an equity share in the property.
The schemes are not open to single people requiring a mortgage more than 4.5 times their income, or couples for more than 3.5 times their joint income.
Help to Buy scheme: everything you need to know
There are two other shared equity schemes in Scotland, which were created for first-time buyers only, under its LIFT (Low-cost Initiative for First-Time Buyers) programme.
New Supply Shared Equity (NSEE)
- Buy a new-build property either from a housing association or a housing co-operative.
- While you own the property outright, you will be effectively be buying a stake ranging between 60-80% in the property with the remainder being funded by the Scottish Government.
- You need to have a small deposit and get a mortgage to buy your portion.
- The Scottish Government will have security on the property to cover the proportion it has funded.
- You do not have to pay interest on the government funded portion.
- You repay the government when you sell.
- You can buy a bigger stake after two years until you own it all.
How much can you afford to borrow?
You repay your mortgage lender and the Scottish Government when you sell.
Here’s an example of the scheme for someone buying 60% of the property:
| Cost of property | £100,000 | % of cost |
|---|---|---|
| Scottish Government share | £40,000 | 40% |
| Your share | £60,000 | 60% |
| Sale price of property | £120,000 | |
| Scottish Government share | £48,000 | 40% |
| Your share | £72,000 | 60%* |
Open Market Shared Equity scheme
This scheme operates on a similar basis to NSSE except:
- it allows you to buy a property for sale on the open market
- the maximum stake which you can buy in the property can be up to 90%.
Shared Ownership
This is a cross between buying and renting, aimed mainly at first-time buyers.
You buy a share of the property (usually 25%, 50% or 75%), and a housing association, or other social housing organisation, owns the rest.
You pay to the Housing Association an occupancy charge (equivalent to a reduced rent) on the part you don’t own.
Priority is generally given to council and housing association tenants or people on their waiting lists.
Your next step
This article is provided by the Money Advice Service.
