How to tell if you’re eligible for the Help to Buy scheme (Scotland)
The Help to Buy (Scotland) scheme is a great option for people living in Scotland who want to purchase a property but are finding it difficult to fund the full purchase price. Under the scheme, the Scottish Government will fund up to 15% of the purchase price as an interest-free loan and in return, when you eventually sell your home, you repay the government the same percentage of its value.
In this post, we discuss who is eligible for the Help to Buy (Scotland) scheme. For more general information about the scheme, head here.
Not everyone qualifies for support from the Help to Buy (Scotland) scheme. In order to be eligible, you must meet the following criteria:
The property you want to buy must be a new build home
The house you want to purchase must be a new build home – that is, it must be a brand-new home without any previous residents.
Only selected house builders like Campion Homes can sell their homes with Help to Buy (Scotland) – view the full list of qualifying builders here.
You must have consulted an Independent Financial Advisor (IFA)
After you have reserved a property through a home builder like Campion Homes, they will refer you to an Independent Financial Advisor, who will be able to complete the application form which must be submitted to the appropriate governing body representing the Scottish Government. Your application form will then be assessed and your eligibility for the scheme determined. Depending on your circumstances you can be offered the loan up to a maximum of 15% of the purchase price.
Your mortgage is offered through a qualifying lender
Only certain lenders can offer a mortgage with Help to Buy (Scotland). Your IFA will make sure you get the best deal going. You will be asked to provide payslips from the last three months when you apply for a mortgage.
You can find the complete list here.
The value of the property must be under £200,000
Only homes under the value of £200,000 will be considered for support. If the house you want to purchase is valued at over £200,000, then it will not qualify under the Help to Buy (Scotland) scheme.
You don’t currently own a home
If the home you want to buy will be the first you have ever purchased, then the scheme might be suitable for you. However, the scheme is not just for first time buyers.
Existing homeowners might be eligible for the Help to Buy (Scotland) scheme, provided they have sold their home before seeking support.
You require shared equity support
If you can afford 100% of the purchase price of the property through a combination of deposit and mortgage, then you can’t qualify for the scheme.
You are only borrowing what you can afford to pay back
Generally, if you are purchasing a home on your own, your mortgage should be no more than 4.5 times your annual income to pay for the property.
If you are buying with another person, then generally you should borrow no more than 3.5 times your combined annual income in order to qualify for the scheme.
You need to have the right type of mortgage
Those who wish to take out an interest-only mortgage are not eligible for the Help to Buy (Scotland) scheme. To qualify, you would need to take out a repayment mortgage of at least 25%.
You can afford the monthly costs of the home
You will be assessed to ensure that the monthly costs of the home (i.e. the mortgage repayment and associated fees) add up to no more than 45% of your income. If buying the house would put your home expenses above this threshold, then you won’t qualify for the scheme.
As you can see, there are a number of conditions that you must meet in order to be eligible for the Help to Buy (Scotland) scheme. Although the information may seem a little overwhelming, your Independent Financial Advisor will be able to steer you through the process with as little confusion as possible.