Help to Buy Scheme: who can apply for assistance, and homes you can buy as Scottish Government extends scheme to 2022

Are you looking into the Help to Buy (Scotland) scheme? (Photo: Shutterstock)

Speaking at the daily press conference live from St Andrew’s House in Edinburgh, Nicola Sturgeon announced that the Help to Buy (Scotland) scheme will be extended by a year.

The announcement means that more than 2,000 households will be able to buy a new home as part of the scheme.

This is everything you need to know - from what the scheme is to how you can apply.

Why is the scheme being extended?

Speaking at her daily press conference, Sturgeon said: “We are extending our Help to Buy scheme, which was due to come to an end next March. We are extending that to March 2022.”

She explained that in recent years, the scheme has helped 17,000 people to buy new build homes, with “more than three quarters of them aged 35 or under”.

The First Minister explained that due to the pandemic, the scheme is not being used, so by extending it, she hopes that the people who would have otherwise missed out on the scheme will be able to move into their new homes in the future.

Housing Minister Kevin Stewart said: “A strong and growing house building industry is vital to Scotland’s future economic prosperity - and particularly as we plan our strategic economic recovery from Covid-19.

“This extension will provide us with the opportunity to reassess future priorities for the market, taking account of economic conditions following the pandemic, as well as providing a helping hand to those seeking to buy their own home.”

What is the Help to Buy scheme?

The Help to Buy (Scotland) scheme allows buyers to purchase a new home without having to fund the entire cost.

Buyers are expected to pay a minimum of 85 per cent of the home’s total purchase price.

The Scottish Government holds the remaining percentage share under a shared equity agreement, which the buyer enters into.

The buyer has the complete title to the home and their name will also be on the title deeds, but there will be a mortgage (or ‘standard security’) on the home to ensure that the government’s share is protected.

If you’re looking to buy a new build home via the scheme, the property purchase price cannot be more than the threshold price.

The threshold price is £200,000 for the financial years 2018-19, 2019-20 and 2020-21.

There are two types of Help to Buy (Scotland) schemes:

- The Affordable New Build scheme

- The Smaller Developer scheme

Both schemes work in the same way, and the agent assigned to you will inform you of which one you’ll be applying for depending on the home you want to buy.

Who can apply to the scheme?

The scheme is open to first time buyers as well as existing homeowners.

The Scottish Government website says that before you apply, you’ll need to make sure that:

- Your mortgage and deposit covers a combined minimum of 85 per cent of the total purchase price

- The value of the new build is not over the maximum threshold prices for the scheme

- You have spoken to either a lender or independent financial adviser before applying

- Your mortgage must be a repayment mortgage, of at least 25 per cent of the purchase price, and it cannot be an interest only mortgage

How do I apply?

To apply for the scheme, you must first contact a participating home builder.

You can see the full list of registered builders on the Scottish government website here.

After you’ve done that, you will need to speak to either a lender directly, or to an independent financial adviser, who will be able to discuss your current financial position and your ability to obtain a mortgage.

There are 16 lenders offering mortgages for the Help to Buy scheme, including Bank of Scotland, Barclays, Halifax, Lloyds Bank and Nationwide. Click here to see the full list of lenders.

After that, you will then need to reserve the home you want to buy and get a full reservation agreement by the builder - be aware that you might need to pay a reservation fee to do this.

Once you’ve done that, you should apply for funding through the administering agent for your area. You can see the list of administering agents for each area here.

After you’ve completed this process, they’ll assess your application and let you know if you’re eligible for assistance through the scheme.

What do I do if I’m eligible?

If you’ve been confirmed as eligible for the scheme, they send you an ‘Authority to Proceed’ (ATP) which confirms your eligibility and lets you proceed with the purchase.

Your solicitor will then check to make sure the mortgage offer, property price and funds you have are all valid under the terms of the ATP.

After everything has been checked and the purchase is ready to complete, your solicitor will gather the following:

- The funds from your mortgage lender

- The Scottish Government’s contribution

- The deposit you’re paying

Your solicitor will then use these funds to pay the builder the purchase price of the home and complete the deal.

The Scottish Government website says: “After you buy your home, you should be given an 'After Sales' brochure by the agent who deals with post-sales work in your area.

“This should be able to answer most questions you have about things you can and can't do under the terms of the Help to Buy scheme.”