How purchase schemes can help
If you are finding it difficult to save a large deposit or to get on the property ladder, there may be schemes available to help. These are often aimed at first time buyers or those purchasing new-build homes, and they usually come with specific eligibility criteria.
Equity loans and “help to buy”-style schemes
Under some equity loan schemes, the buyer provides a minimum deposit and receives an additional loan from a government body or housing provider, up to a set percentage of the property value. This can reduce the size of the main mortgage needed.
For example, you might put down a 5% deposit, receive a 20% equity loan and take a 75% mortgage for the balance. The equity loan is usually fee-free for an initial period, after which fees or interest start to apply.
These arrangements often require that you live in the property as your main home and do not sub-let it. There may also be limits on the maximum property value and other conditions.
Shared ownership
Shared ownership lets you buy a share of a property and pay rent on the remaining share, which is typically owned by a housing association, local authority or other landlord.
In many schemes, you can initially buy between 25% and 75% of the property and pay a reduced rent on the rest. Over time, you may be able to purchase further shares (known as staircasing) until you own the property outright, at which point you will no longer pay rent, only your mortgage and other costs.
Shared ownership schemes have specific eligibility criteria and are usually aimed at people who cannot afford to buy outright on the open market.
Part exchange on new-build homes
Part exchange incentives may be available if you already own a property and are buying a new-build home from a developer. In a part exchange, the developer effectively becomes the buyer of your current property.
The developer will usually arrange independent valuations to agree a market-related price. You then use the value of your existing home as part of the payment towards the new-build, which can remove the need to find a buyer on the open market and reduce the risk of chains collapsing.
All purchase schemes and incentives have advantages, disadvantages and conditions attached. It is important to read the small print and, where appropriate, seek independent advice before committing.
Once you know whether a purchase scheme might work for you, the next step is to firm up your budget and start shortlisting areas and properties.
Purchase schemes – FAQs
Are purchase schemes the same across the UK?
No. Scotland has its own housing policies and schemes, which can differ from those in England, Wales or Northern Ireland. Always check that any scheme you are looking at applies to properties in Scotland.
Can I use a scheme and still choose my own solicitor?
In most cases you can, but some schemes and developers may have panels of solicitors they prefer to work with. You are usually free to ask for an independent Scottish solicitor if you want your own advisor.
Do shared ownership and similar schemes make it harder to sell later?
Resale processes can be different under shared ownership or other schemes and there may be restrictions or extra steps. Your solicitor should explain how resale works before you commit.
Where can I find up-to-date information on Scottish schemes?
Because schemes change over time, the best sources of current information are official Scottish Government housing pages, local housing associations and qualified mortgage advisers.