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Help to Buy is the common term for the scheme now entitled “Help to Buy (Scotland) Affordable New Build Scheme”.

If you want to buy a new build home but can’t afford the total cost, you might be able to get help through the Help to Buy (Scotland) Affordable New Build scheme.

The scheme is open to first time buyers and existing homeowners and helps you with up to 15% of the purchase price of a new build home. The scheme will operate until 31 March 2021.

However, you may only buy a new build home from a builder who is registered with the scheme. The Scottish Government has a list of participating home builders.

As you might expect from a government funded scheme there are conditions that require to be satisfied in order to qualify. As mentioned, the scheme is open to both first-time buyers and existing homeowners so therefore everyone can apply; there is no age restriction either.

  • The scheme will operate until 31 March 2021
  • The maximum threshold figure for the scheme is £200,000; this means you cannot purchase a new build property at a price greater than £200,000
  • The Scottish Government will contribute up to 15% of the purchase price (£30,000.00)
  • If you are aged 60 or over, you do not need to take out a mortgage
  • If you are a First Time Buyer with a Help to Buy ISA you can use your savings and bonus towards the purchase

How much of the home will you own?

Although not clear from the title of the scheme the Scottish Ministers secure their contribution on a shared equity basis. If you apply for the scheme you will be expected to maximise your contribution to as high as is reasonably affordable; your contribution combined with any mortgage you take must reach 85% of the purchase price. This is the minimum amount you will own. The shared equity basis also means that the Scottish Ministers Contribution will be registered against the property and will require to be repaid in the future although there are no ongoing repayment requirements such as a mortgage requires. The title to the property will be taken in your name(s) and the Scottish Ministers and your lender will have their interest registered on the title sheet to secure their interest in the property.

If you do require to or intend on taking a mortgage you cannot use the Scottish Ministers Contribution as your own deposit on the property. If your mortgage provider requires you to provide a deposit it must come from your own funds such as savings, Help to Buy ISA and bonus or if you are fortunate enough a gift perhaps from a family member.

Mortgage calculation – it is typical of mortgage lenders in this scheme, and it is worth noting that not all lenders participate in the Help to Buy scheme, require a 5% deposit. Thereafter they will work out your possible mortgage borrowing on a multiple of 4.5 times your household for a single person and up to 3.5 times for a couple. Your monthly costs should not exceed more than 45% or your net disposable income.

Again, it is worth noting that if your application to the scheme is eligible you will be informed what percentage of the property you will be expected to buy. You will not be able to take a lower mortgage if your affordable income calculation shows that you can afford and maintain a higher one. The reason for this is that the Scottish Government is there to assist with the help you need in buying a new home but nothing more than that.

For those over age 60 there is no requirement to take a mortgage. However, if you are funding the purchase through the sale of your existing property then you will be expected to maximise your contribution from the sale proceeds.

For anyone, regardless of age, if you can raise the funds matching the purchase price through the sale of your existing or previous property and/ or have savings to contribute then you will not be eligible for the scheme.

As with any property purchase you should also take account of additional costs. Although the scheme is to help people get on the property market the contribution from the Scottish Ministers is the full extent of their outlay, they will not pay your legal or tax costs.

Contact The Mckinstry Company

If you are considering applying under the Help to Buy (Scotland) Affordable New Build Scheme and would like a better idea of timescales and all associated costs, then please contact our Property Team on 01292 281711 who will be delighted to assist.

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