First Time Buyers in Scotland: what you need to know

First Time Buyers in Scotland

First-time buyer’s levels in Scotland are at a ten-year high, and according to the latest Rightmove surveys, this is a trend that is only going to grow. This means that Scotland is one of the safe and best places to invest in a property, and one of the friendliest markets for first-time buyers. Even so, it can be difficult to scrape together the cash needed for a deposit. Here is what first time buyers in Scotland need to do before considering taking that first step onto the property ladder.

Work Out Your Finances

Calculate how much money you can afford to channel into a house on a monthly basis. Add up your average monthly expenditures and take that away from current monthly income. This should give you a rough idea of how much you can afford per month. Free online budget planners like this one from the Money Advice Service are a fantastic resource for planning budgets. Shelter Scotland has some fantastic tips on how to lower your monthly expenditure.

Find how much money you can borrow. This forward planning will tell you how much you have to live on per month before after outgoings and will help you find a home where you can live comfortably.

One invaluable tool in working out your monthly budget is the home report. A home report should include all the information you need to work out a projected detailed monthly budget like, council tax band, energy costs, any repair work that needs to be done, or any additional upkeeping cost for communal areas.

Jason McGrinder, CEO of Home Report For You, stated that the ‘home report is an underutilized item in the negotiation of asking price. The majority of buyer do not use the valuation or report to the maximum effect to leverage lower asking prices.’ They believe by checking all the facts in a home report, such as the length of time the property has been on the market, the valuation, and the state of repair buyers could negotiate better and lower deals.

Other cost fees you want to factor into the cost of buying your first home include: –

  • Survey fees for your mortgage lender
  • Valuation fees for your mortgage lender
  • Land and Buildings Transaction Tax
  • Mortgage Broker’s Fees
  • Solicitor’s Fee
  • VAT
  • Removal services charges

The costs of finding a new home may look overwhelming but Scotland is committed to helping first-time buyers find an affordable home and as such, there is a lot of help out there for first-time buyers.

The Help First Time Buyers Can Find in Scotland

There are a few schemes the Scottish government has in place to make buying homes more affordable to first-time buyers.

  1. Low-cost Initiative for First Time Buyers

The Scottish government supports first time buyers through a number of support relief schemes in an effort to make first time home affordable. They do this through two shared equity schemes one designed for new builds and another for property listed on the open market. Shared equity schemes are a way of buying a house without having to save up all the funds yourself. The Scottish Government funds a set amount of the properties price which will be repaid when you sell your house.

  1. Help to Buy for First Time Buyers

Another initiative that first-time buyer might want to consider using is Help to Buy (Scotland) which helps first time buyers with deposits on new build homes. To be eligible for this scheme you will need to make sure that: –

  • the combined total of your mortgage and deposit cover 85% of the purchase price.
  • the new build home does not exceed the maximum threshold
  • before you apply for the scheme you have taken time to consult a lender or financial adviser.
  • you have a repayment mortgage, not an interest-only mortgage, for at least 25% purchase price.
  1. Tax Relief for First Time Buyers

From June 2018 it will get even easier for first time buyers in Scotland to get their foot on the housing ladder. Derek Mackay has announced that a £600 tax break for 80 percent for first-time buyers in Scotland by making them exempt from Land and Building Transaction Tax in an effort to ‘make homeownership a reality for more of our young people.’

Being a First Time Buyer Can Help You Negotiate for a Lower Asking Price

Being a first-time buyer gives you a distinct advantage you can leverage when negotiating the price for a property – you are not part of a chain, and the seller will not have to wait for you to sell your house before you can buy theirs. This allows for a quicker sale with less risk that someone in the chain is going to pull out and disrupt the process. A cheaper quick, guaranteed sale is preferable to a lengthy, risky one at a full asking price. Couple this with a guarantee certificate from a building society for maximum effect. The Homeowner’s Alliance has some great tips on how to negotiate a great price.