Looking to buy your first home in Scotland? This guide outlines the process and provides some tips and tricks to make your application seamless. Be sure to check out our Common Mortgage Myths article for more information.

There’s no denying buying your first home is exciting, but it can also be daunting and complex. At the end of the day, it is likely the largest purchase you’ll ever make, so it’s worth conducting due diligence to make sure you get it right.

The good news is that a new Government scheme means that first time buyers can secure a mortgage with only a 5% deposit, meaning it is a great time to buy your first home in Scotland.

The first section of this article discusses the process of buying your first home in Scotland. The second half of this article discusses the new First Home Fund and how you can take advantage of it to secure a property for a great price.

The process for buying your first home in Scotland

First time buyer? Use this buying process for first time buyers as a reference to make the process of getting your first mortgage easier.

The first step is to ensure you save enough money for your deposit. Most lenders need a deposit of at least 10% of the mortgage value. However, with the First Home Fund, first time buyers are put at a huge advantage as they can secure a mortgage with only a 5% deposit (scroll down to find out more about the First Home Fund).

If you're new to mortgages, there can be a lot of confusing terms thrown about. Feel free to use our Definition of Common Mortgage Terms article as a reference guide.

1. Secure a property agent

In Scotland, it is a legal requirement to have a solicitor represent you when buying a property. Unsure where to find a property agent? Contact us and we can refer you to trusted agents.

2. Get a mortgage in principal

A mortgage in principal is a confirmation from the bank outlining how much they may be willing to lend you. A mortgage advisor can help you with this.

3. Plan a budget

How much do you spend? How much do you earn? How much will moving house cost? A mortgage advisor can break down exactly how to plan your budget.

4. Search for your dream home

This is where the fun begins. You can use a property website such as Rightmove, or use real estate agents. Be sure to remember your budget and how much you can afford to avoid disappointment!

5. Make an offer

The make or break moment. Make sure to take advice from your mortgage advisor or property agent to increase the likelihood of your offer being accepted.

6. Offer response

If your offer is accepted, your mortgage advisor can guide you through the necessary paperwork. If your offer is rejected, speak with your mortgage advisor or property agent about either changing your offer or finding another property.

7. Move in day

Boxes need to be packed, vans need to be booked. Arguably, the most stressful part of the process. After a bit of sweat and hard work, you’ve achieved your goal and now living in your very own property. Congratulations!

First Home Fund

The great news for those looking to buy their first property in Scotland is that in December 2019, Holyrood launched the First Home Fund.

What is the First Home Fund?

This is a shared equity scheme (a shared equity scheme is when a body provides a loan to top up your mortgage with the promise of a share of the profits should you either repay the loan or sell your property) that allows first time buyers to purchase their property with assistance from the Scottish government. The scheme is scheduled to remain open until March 2021, and £150 million has been set aside for it.

How does this impact my Help to Buy Scotland scheme?

The Help to Buy Scotland scheme is only for new-build properties. The First Home Fund can be used on any residential property.

You can not use both the Help to Buy and First Home Fund in conjunction with each other. Speak to your mortgage advisor for advice on which is best for your situation.

Do I still have to pay a deposit?

Yes, you do. But the good news is that you only need to put down a minimum 5%, compared to most lenders' minimum of 10%. This means you can get onto the property ladder with half as much money for a deposit. A huge advantage for first time buyers!

What’s the maximum amount I could get?

The maximum amount of support is £25,000. This is capped at 49% of the purchase price. Speak to your mortgage advisor who can provide specific information for your situation.

First time buyer status

If you are a first time buyer, but your partner is not (and you’re buying the property jointly with them), then you technically still have first time buyer status and will still be eligible for the First Home Fund.

Is there a cost?

Unfortunately, yes. There is an application fee of £550. The good news is the cost of this is refunded if your application is unsuccessful.

Is there a limit to the value of the property I can purchase under this scheme?

No. Whilst the Help to Buy scheme is capped at £200,000, the First Home Fund can be used to purchase any property.

What timescales do I need to be aware of?

Once your application to the scheme has been successful, and your solicitor has received the award letter to proceed, you need to ensure the missives (a contractual letter exchanged between the solicitors of the buyer and seller) are concluded in three months. You then have to ensure you have completed the purchase in at least 6 months after the missives have been concluded. This could add problems, especially if you are buying a new build where there is a risk of delay. It’s best to take advice from your mortgage advisor before submitting your application to ensure these timescales can be adhered to.

How do I apply to this scheme?

It is essential to have an offer accepted on a property before you apply. This acceptance can either be written or verbal.

Whilst the application process is done through the First Home Fund website, we highly recommend speaking with a mortgage advisor either before or during your application.

If you do not have a mortgage advisor yet, for a limited time, MortgageBud are offering completely free mortgage consultations.