Being able to afford to buy your own home takes a lot of prep. It takes a lot of saving and a lot of spending, because you’ll need to wipe your debt with money and grow your credit score with regular payments. So, it takes money to spend money on a home? Sounds like a double whammy of horror.

Luckily, there are a few government-funded initiatives that can help out a first-time buyer trying to get on the property ladder. Some of the names you might have heard of are no longer around, like the First Home Fund, but have been replaced by other policies to help out first time buyers. We’re breaking down the Scottish Government homeowner schemes that are available. Read on and see if anything here can help you get into that dream home.

Help to Buy ISA

Help to Buy schemes are now closed to new applications, however, if you opened a Help to Buy ISA (Individual Savings Account) before the close of the scheme, the Scottish Government will respect the terms of the ISA.

There are two Help to Buy schemes: the Affordable New Build scheme and the Smaller Developer scheme and they work in much the same way as each other. The only distinction is the size of home you are looking to buy.

The schemes are open to first time buyers and existing homeowners, the only qualifications are to ensure that your mortgage and deposit will cover a combined minimum of 85% of the total purchase price and ensure that the value of the new build stays under the maximum threshold for the scheme.

As a first time buyer you can also use the Help to Buy ISA to save money and claim a 25% bonus from the Scottish Government. There is a minimum limit of £400 and a maximum limit of £3,000. This can go a long way to gaining enough money for your deposit, with the government putting into the pot as well as just yourself and a possible co-habitant.

Low-cost Initiative for First Time (LIFT) Buyers

Initially created to take over the role offered by the First Home Fund, the Low-cost Initiative for First Time Buyers allows first time buyers to pay for a home. There are two LIFT schemes: the Open Market Shared Equity (OMSE) scheme and the New Supply Shared Equity (NSSE) scheme.

The Open Market Shared Equity scheme provided £80 million in the 2019/2020 period to first time buyers to buy a home on the open market. There is a limit on price but ultimately it allows first time buyers and priority buyers to buy a home without having to reach the full cost of the home. First time buyers can instead put forward their share, roughly between 60% and 90% of the home’s cost, and the Scottish Government will hold the remaining share under a shared equity agreement.

There are different threshold prices across Scotland, ranging from £50,000 to almost £300,000. You can check the thresholds on the Scottish Government website.

You will have complete title to your home, with your name on the deeds, which means you have the same responsibilities as any other homeowner. You are responsible for its maintenance, you will have to pay a mortgage and you will need to cover the home contents insurance, building insurance, council tax, utilities, and furniture. It also means, however, that the Scottish Government gains a portion of the money if you were to sell your home. You also have the option of increasing your share down the line if your financial situation improves.

The New Supply Shared Equity scheme has a similar premise but is limited to new build homes from a housing association or local council. It’s useful if you’re looking for something new but can’t afford the full price.

It works in much the same way too. The New Supply Shared Equity scheme has limits of roughly 60% to 80% of the home’s cost, with the Scottish Government holding onto the rest in a shared equity agreement. You have all the same responsibilities as a homeowner, and you have the option of increasing your share if your situation changes. 

However, in order to qualify for both of these schemes, you have to be earning a low to medium income, which should be verified by your local council or social landlord. You will also need to show that you cannot buy a home that suits your needs without the NSSE or OMSE schemes.

Conclusion

Being a first time buyer doesn’t have to feel like a miracle, or an unreachable goal. There are schemes in place to help make the housing market a level playing field. If you use them to your advantage, you could find yourself getting handed a set of keys quicker than you think. For more advice, contact our team today.