A £150m pilot scheme, which will see first-time buyers offered government loans of up to £25,000, will be launched by the Scottish government on 18 December, Inside Housing can reveal.
Under the scheme, which was announced by the Scottish National Party (SNP) in April, all first-time buyers will be able to apply to the Scottish government for a £25,000 loan, as long as at least 25% of their home will be covered by a mortgage.
The government’s contribution will be secured on the equity of the home and buyers must repay the government’s percentage equity share when they sell their home.
For example, if the government’s original contribution amounts to a 10% equity share in the property, the government will receive 10% of the sale price when the home is sold.
Buyers will not be required to make any monthly payments on the loan and no interest will be charged.
The loan can be used in addition to money provided by the UK government through a Help to Buy or Lifetime ISA, but cannot be used in conjunction with another Scottish government shared equity scheme, such as Help to Buy (Scotland).
Last month, the UK government closed its Help to Buy ISA scheme, which involved participants gaining a government bonus of up to £3,000 when buying their first home, for new participants. The scheme had run since 2015 and allowed potential first-time buyers over the age of 16 to save with the income free of tax.
Kevin Stewart, Scottish housing minister, said: “Some first-time buyers trying to buy a home can call on the financial help of relatives or friends, but for many, saving for a deposit has become an obstacle. That isn’t fair so we are helping first-time buyers raise the deposits they need.
“As previously announced we will pilot a scheme to provide first-time buyers with loans of up to £25,000 towards the purchase of a home.
“This will be another part of our homeownership schemes, which have helped more than 32,000 households purchase their own property since 2007, and particularly supporting those aged under 35.”