What is the Help to Buy Scheme?
Help to Buy (Scotland) is a scheme run by the Scottish Government and selected house building firms in Scotland. If you qualify for the scheme, the government will give you an interest free loan to cover up to 15% of the purchase price of a newly built residential property. You will only have to repay this money if and when you sell the property. The only stipulation the government make is that when you eventually sell the property, you pay them 15% of the sale price – so their investment in the property rises or falls at the same rate as your investment.
There is a limited amount of money available from the government each year. Please contact us to find out what is happening with this year’s allocation of funds.
Who is eligible for Help to Buy (Scotland)?
You can seek Help to Buy only if you are buying a new build property from a participating builder and the property will be your main and only residence. If you already own a property, you would have to sell it before taking part. You cannot part exchange a property using Help to Buy. In 2016, the scheme is only available on properties up to £230,000 in value. In 2017 that falls to £200,000 and in 2018 it falls to £175,000.
If you think you are eligible for the scheme, talk to your builder and your Independent Financial Advisor. If you do meet the criteria, you will then fill in and submit an application form. This should be done before you apply for any mortgage you may require.
You can find out more about Help to Buy (Scotland), including a comprehensive leaflet, on the Scottish Government’s website.
Can I count the 15% towards the deposit on a mortgage?
No. You will still need to ensure you have funds to pay a deposit of 5% of the full purchase price of the property, any reservation fee on the property and all other relevant fees such as land tax, legal and reservation fees.
What is a “Help To Buy” ISA?
If you are saving for a mortgage and a first time buyer, you should consider saving in a Help to Buy Individual Savings Account (ISA). For every £200 you save each month, the Scottish Government will give an additional £50, up to a maximum of £3000. This is not a loan and you do not have to repay it at a future date. The government will only pay £50 per month, meaning it will take up to 5 years to access the full £3000. The minimum you can claim is £400 (on £1600 savings). If you are buying a home with a partner, he/she can have their own ISA, meaning you both could receive up to £6000 in total. This government incentive is on top of any interest offered by your bank. When you are ready to buy a house, your solicitor or estate agent can apply to the government to release the funds. It is important to note that you cannot apply yourself and not all solicitors and estate agents are licensed by the government to do so. Wallace Quinn are licensed solicitors for this scheme.