The Scottish Help to Buy Scheme was introduced in September 2013, to give people support to purchase new build properties in Scotland. Under the Help to Buy Scheme, the government takes a stake in the property of up to 20%, allowing you to obtain a mortgage on the rest with a deposit of as little as 5% of the purchase price.
To be eligible for Help to Buy (Scotland) you must:
And the property you wish to buy must be:
If you meet the criteria and are accepted for the Scheme, the Scottish Government will purchase up to a 20% stake in your property. You will still own the property outright and you will not have to pay an occupancy charge on the government’s stake. If you want to sell the property, then the government will get back its stake.
You want to purchase a property worth £100,000. You have a deposit of £5,000. The government puts up a stake of 20%, which is £20,000. You obtain a mortgage for the remaining 75%. When you come to sell, the property is now worth £120,000, an increase of 20%. The government gets back its 20% stake which is now worth £24,000.
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Help to Buy (Scotland) FAQs
In most cases, you can buy back some or all of the government’s stake, if you can afford it. This is called ‘staircasing’ – but bear in mind that if property prices have risen, it will cost you more to buy back the stake.
If property prices fall, and you choose to sell your property, both you and the government will share the loss proportionately. For example, if the property you purchased for £100,000 sold for £80,000, the government would only receive £16,000 for their £20,000 stake and you would receive £64,000 for your £80,000 stake.
On the other hand, if property prices fall and you choose to staircase, you can buy back the government’s share for less than they paid for it.
In this way you and the government share both the benefits and the risk.
The government can take a stake of up to 20% - the government will expect you to buy as much of a stake as you can reasonably afford. If your deposit and income means that you can afford more than 90% of the purchase price, you will not be eligible for the scheme.
If you wish to add – or remove – someone, for example a partner, from the documentation of the property, you can do this, but you will need to pay legal and administration charges. These will be explained to you before you proceed.
If you wish to remortgage the property to get a better deal, you can do so, but you will have to pay legal and administration charges which will be explained before you proceed.
If you wish you may be able to extend your mortgage with the original lender. However, if the additional lending will mean your current loan is more than £2,000 over the amount you originally borrowed, then you will need to get consent from the government. You will also need to pay for a valuation on the property.
Help to Buy (Scotland) is not intended for those who buy a property with the intention of funding the mortgage by renting out rooms. However, if your circumstances change after completion, and you find yourself in financial difficulty, you may be able to rent out a room. You must request permission from the agency which administered the sale. Each application will be considered on a case by case basis and permission isn't guaranteed. If you have staircased to 100% then the above restrictions do not apply.
Help to Buy (Scotland) is not intended to fund buy-to-let investments. However if your circumstances change after the sale has completed, for example, you have to relocate for work, you may be able to let out the property. You must request permission from the agency which administered the sale. Each application will be considered on a case by case basis and permission isn't guaranteed. If you have staircased to 100% then the above restrictions do not apply.
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