Mortgages in Scotland
Are you interested in obtaining a mortgage in Scotland The market and mortgage process in Scotland are similar to those in England and Wales? However, there are some key differences that you should be aware of. It is important to get the right advice before you move forward.
We work with experts to increase your chances of success and save you time and money.
This article will explain the requirements and conditions for getting a mortgage in Scotland. It also includes any country-specific criteria you may need to apply for a Scottish mortgage.
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Can I get a mortgage loan in Scotland?
You are eligible as long as you meet the affordability and eligibility requirements of the lender. Although mortgages are available in Scotland, fewer lenders exist than in England. Many of them also have restrictions regarding postcodes.
To ensure you get the best deal, speak with a broker specialising in all market aspects, especially if your purchase is not in a major city or town.
What is the process of obtaining a mortgage in Scotland?
Although there are some differences, mortgages in Scotland operate exactly as in England and Wales.
It is important to understand the differences in mortgage rates between Scotland and the rest of Britain when you’re looking at purchasing property in Scotland.
The legal system in Scotland is different from that of England and Wales. There are three major differences when it comes to buying property northwards.
- Transaction speed
- Clarity in valuation
- There is no guarantee of a sale
These points are covered in greater detail in the next section.
How to get a Scottish mortgage
It is recommended to speak with a broker with experience in Scotland mortgages. We’ll be happy to introduce you to one!
In Scotland, you will need your funding before making an offer on a property. Although this might prove difficult if you are also selling your property, it is rare for chain breaks to occur. A solicitor will be able to present your offer, and you’ll need to locate one sooner.
Most mortgages in Scotland are freehold. This means you can feel confident knowing it is yours for as long or as you wish.
Although the advertised property price is typically 5-10% lower than the home report’s valuation, you might also see property prices advertised as “offers over”, meaning that the borrower will accept only bids that are higher than the advertised price.
The transaction becomes legally binding once a bid is accepted. After the bid has been accepted, the parties will negotiate the details, such as the entry date and the items remaining on the property. This process is known as “concluding all the missives”.
After this stage is completed, the sale becomes legally binding. It’s extremely rare for a chain of links to fail.
What is the average time to apply for a mortgage in Scotland?
The mortgage timeline in Scotland is six to eight weeks. However, property sales can be completed in four to five weeks if the transaction goes smoothly.
What deposit is required to get a mortgage in Scotland
Lenders will ask for deposit amounts. This will depend on the amount of risk involved in the deal.
Is there a 5% deposit mortgage in Scotland?
As a rule, residential lenders will offer a maximum of 85% loan-to-value (LTV), and some as high as 90% 95% (5% down) depending on their perceived risk and appetite to lend.
See our guide to 95% LTV Mortgages in Scotland for more information.
Can I get a mortgage for a new building in Scotland?
Many lenders will require a higher deposit if you want a mortgage to finance a new-build property, standard construction or major renovations. The lender will typically cap the LTV at 75-80%.
Is there no deposit mortgage in Scotland?
No deposit mortgages are very rare in Scotland. However, if you are looking for ways to increase your deposit, there are government Mortgage programs that might be able to help. Or you could look into a Guarantor Mortgage. We’ll talk more about these options later.
We can help you determine the right amount of deposit for you.
Title burdens in Scotland
Title burdens refer to conditions in the title deeds attached to the property’s ownership. These conditions can include restrictions on the use and alteration of the property and where trash cans can be placed. The seller will sign the transfer deeds of title, also known as the “disposition”.
Sasine Register
The Sasine Register dates back to 1617 and is the oldest international, national public land registry. It is currently being replaced by the map-based Land Register of Scotland and will close in 2024.
The Sasine Register has been closed for the registration of deeds concerning:
- Dispositions
- Standard securities
- Leases
- Lease Assignments
- Register registered plots of land and leases
First-time buyers are not affected by this change, but homeowners in Scotland will notice that your property is now on the Sasine Register. If you wish to borrow additional money with a new lender or take out new borrowings, it will trigger an application for the land register.
Home report
Every property sold on the open marketplace in Scotland must have a home report. This report is similar to a mortgage valuation report and can be used by mortgage companies to lend on a property.
The home report comprises a single survey (similar to a mortgage survey), a property questionnaire, and a home energy report. The seller completed this report. The single survey is conducted by a chartered surveyor, who will report on the property’s condition and provide a valuation.
How big a mortgage can you get in Scotland?
What size mortgage is possible in Scotland? It all depends on your earnings and financial ability.
Most mortgage lenders limit their lending to 4.5x the borrower’s income. Some will lend 5x, while others will loan as high as six under the right circumstances.
It is important to consider the mortgage repayments when calculating your budget and other costs like transfer fees, legal fees and Land Registry fees.
Land and Buildings Transaction Tax will be applied to properties that cost more than £145,000 – similar to Stamp duty in England and Northern Ireland.
What happens if I obtain a principle mortgage agreement in Scotland?
You might have to pay a fee to secure a loan agreement for Scotland.
The mortgage companies will determine how much they can lend you. This is done by looking at your income, financial obligations (loans and credit cards, child maintenance expenses, etc.), essential expenditures (utility bills and travel costs, etc.) and quality of life and lifestyle (clothes, toiletries, and recreation).
How many documents do I need to submit when applying for a Scottish mortgage?
You will need proof of income when applying for a mortgage in Scotland. There are two types of requirements: those in permanent employment and those looking to get a mortgage as a self-employed.
The following information is required when applying for a mortgage:
- Copies of bank statements for three months.
- Three months of payslips from your employer, or…
- If you are self-employed, three years of audited accounts
- Copy of 12-month-old mortgage statements or
- Documentation of regular rent payments.
- You have information about buildings and contents insurance policies.
- Information about any life endowment policy you have.
Transaction Tax on Lands and Buildings
For properties that cost more than £145,000 in Scotland, the Lands and Buildings Transactions Tax must be paid within 30 days of completion.
- Rates are calculated using a percentage of the property’s total value.
- Properties between £145,000 to £250,000 are eligible for 2%
- Properties between £250,001 & £325,000 are eligible for a 5% discount
- 10% off properties between £325,001 & £750,000.
- Properties over £750,000. 12%
If I am an older borrower, can I get a mortgage in Scotland?
It may be harder for older customers to get a mortgage in Scotland. Lenders can limit the maximum age of borrowers, or they may refuse to lend until retirement. Lenders are increasingly willing to remove the maximum age for lending.
You may have other options. You might consider equity release if you own your property or a majority of it. This could be in the form of an interest-only lifetime mortgage. For more information, see our section on later life lending.
How can I find the best mortgage rates for Scotland?
Two things are necessary to get the best rates in the UK: meet the eligibility requirements with as many lenders as possible and apply through a whole market broker like the ones we refer you to. This will allow you to access all the best deals you are eligible for.
How can I compare Scottish mortgage offers?
You should compare all the available deals to ensure you get the best deal. However, this will require a lot of work.
Online rate tables are not recommended as they do not provide a personalised data set and often place sponsored products in prominent positions.
It is a smart move to have a broker make a Scotland mortgage comparison for you. This will save you time and help you avoid credit card issues by matching you with the right lender.
Here are some things to remember when purchasing a house in Scotland.
There are few complications when buying a Scottish property in England. However, there are some details about homebuying north of the border.
Gazumping in Scotland is uncommon.
A seller usually agrees to an asking price for a property taken off the marketplace. No other offers are considered.
Sometimes, you might have to make offers “over” a certain price when buying a house in Scotland.
These cases require interested parties to submit sealed bids and purchase timeframes. The highest bidder will be notified the next day.
If a property isn’t listed as being available for bidders who offer more than a certain amount, it usually means that it’s not for sale at a fixed cost. In this case, the first person to offer it would buy it.
Missives have legal binding.
Scotland has a different exchange of contracts for property purchases. The solicitors of the selling and buying parties exchange letters, known as “missives”, which are legally binding. After exchanging the letters, the seller must give the deed to the customer.
Land and Buildings Transaction tax
This tax is payable by new homeowners in Scotland instead of stamp duty. Property worth more than £175,000 is subject to Land and Buildings Transaction Tax.
Different types of mortgages available in Scotland
Many types of mortgages are available in Scotland for all kinds of customers.
Compare mortgages in Scotland to find the best mortgage for you.
First-time buyer schemes
There are several mortgage options in Scotland for those looking to get their first steps on the property ladder.
First-time buyers (LIFT)
The Low-cost Initiative for First-Time Buyers (LIFT), a mortgage scheme for Scotland, was launched in 2007 by the Scottish Government. Two LIFT schemes are available and can be the best choice for first-time buyers.
New Supply Shared Equity Scheme
You can buy a property built by a housing association or cooperative for between 51% to 80% of its actual value. However, it is often required that you pay up to 60%. The Scottish Government pays the rest.
After two years, you can purchase a larger stake, which will increase in the third year. Eventually, however, it is possible to own all of the property. In some parts of Scotland, housing associations and co-operatives still retain a 20% share in the property.
New Supply Shared Equity With Developers, a version of this scheme, allows you to buy directly from a developer. You will still own the property, but the government and the developer jointly fund the equity loan.
Open Market Shared Equity Scheme
The scheme works similarly to NSSE, except that you can purchase a property on an open market for between 60% and 90%.
This scheme grants priority to those who rent their homes from local authorities or housing associations, disabled people, members of the armed forces (and anyone who left within the last two years), widows and widowers who lost their loved ones in service and up to two years after that.
Register social landlords evaluate all applications and administer the scheme for the Scottish government.
Guarantor mortgages for Scotland
A guarantor is required for a typical first-time buyer mortgage. To be eligible for a guarantor loan in Scotland, you will need a friend or family member to pledge their home or savings to secure the loan.
A guarantor loan allows you to borrow up to 100% of the property’s worth, with a maximum cash term of £500,000.
While you might be more likely than others to obtain a mortgage and be able to borrow more at a higher interest rate, there is still a risk to your guarantor if you default on your mortgage payments.
Springboard Mortgages Scotland
Barclays offers the Family Springboard Mortgage, which allows anyone to help with a mortgage of up to £500,000 for a UK property (exclusions new builds). This is done by opening a Helpful Start Account and providing 10% of the property’s purchase price. The borrower does not need to deposit at all lenders, and it is the only 100% mortgage available for first-time borrowers in Scotland.
For the first three years, interest is charged at a fixed rate. After that, if remortgage payments are made on time, “helpers” get their savings back.
Help with buying a mortgage in Scotland.
Although Help to Buy was initially only available in England, the Shared Equity component was introduced in Scotland in September 2013. It will continue until 2021. You can find all the information you need in our Help To Buy Mortgages in Scotland article.
Scotland: Shared equity mortgages
Two schemes for sharing equity mortgages in Scotland are the New Supply Shared Equity Scheme (NSEE) and the Open Market Shared Equity Scheme.
Mortgages with shared ownership
Shared ownership is an alternative to renting and buying. It’s primarily for first-time borrowers. A share of the property is purchased – 25%, 50%, or 75% – and the remainder is owned by a housing association or other social housing organisation.
On the portion of the property you do not own, an occupancy fee (equivalent to rent) will be charged to the housing association.
We have experts who can help you with any questions.
Right to purchase a mortgage in Scotland
In Scotland, the right-to-purchase scheme was ended in 2016. Right to mortgages is no longer available.
Scotland: Buy-to-Let Mortgages
You can find out more about Scottish buy-to-let mortgages if you’re looking for an investment property that you can let out.
Keyworker mortgages in Scotland
Although there are no specific keyworker mortgage programs in Scotland, teachers and police can benefit from the government assistance available to obtain a mortgage in Scotland.
Alternatively, our experts can offer independent mortgage advice to Scotland.
ISAs
*UPDATE The Help-to-Buy: ISA program is closed to new applicants. However, the Lifetime ISA, a similar government scheme, provides a 25% bonus on top of your contributions. Learn more in our guide.
The Help to Buy ISA Scheme is available for properties up to £250,000 and any mortgage (not just Help to Buy).
To be eligible for a Scottish mortgage-ISA, you must be at least 16 years old and a first-time buyer looking to buy a property to live in.
Your savings are exempt from tax, just like any other type of ISA. You also get the benefit of government contributions. Your contributions will be increased by 25% by the government up to £12,000. The government will add £50 to every £200 you save, up to £12,000.
To qualify for the government bonus, you must save a minimum of £1,600. However, you can also start an ISA with a deposit of up to £1,000. This will also allow you to receive a 25% bonus.
You can get the government bonus anytime after your savings reach £1,600. It will take you over four years to be eligible for the maximum bonus of £3,000.
You will need to transfer cash from a Cash ISA you have already paid into in the past year into your Help to Buy ISA.
The maximum cash transfer is £1,200 – Any more will need to go into a Lifetime ISA or stocks and share ISA, Innovative Finance ISA, or a non-ISA account.
Scotland: Self-build mortgages
You can get self-build mortgages in Scotland. All the details are in our guide to self-build mortgages.
Scotland: Land and agricultural mortgages
A land or agricultural mortgage is required if you need a mortgage to finance your agricultural, equestrian or leisure activities. Land mortgages can be more difficult to obtain than property mortgages and are generally more restrictive.
The LTV of bank loans in Scotland is usually between 30% and 50%. If you have additional security, such as a home or other assets, you may be able to get a 100% mortgage. Before you can approach a lender, you will need to obtain planning permission.
You will also need to provide:
- Three years of audited, certified accounts and current management figures
- Bank statements for two months (up to six in some cases).
- A statement of assets and liabilities
Student’s mortgages in Scotland
Scots student mortgage criteria are very strict. A guarantor is required in most cases (85% LTV), even if the student is not employed.
If a student is financing their education with a federal loan, it could impact the requirements.
The guarantor must also be a property owner, family member, or legal guardian. They must be able to reside and have permanent residence in the UK. The lender may require that they not exceed 75-80 years of age at the end.
Joint ownership mortgages in Scotland
There are two types of joint ownership: joint ownership mortgages and ‘common property.
There are differences between them. Joint ownership means that if one owner dies, the other owner’s share will automatically pass to the deceased without any conveyancing costs.
Joint owners can either sell or give their shares during their lifetimes, but not as part of their will. However, with common property, owners can either sell or give their share during their lifetimes or in a will.
Second home mortgages
There are a few things to remember when looking at a mortgage to purchase a second property in Scotland.
Most second-home mortgages require 25% deposits, and income must be sufficient to cover both mortgages. Your chances of getting approved may be hampered if your credit history has suffered since your first mortgage.
Scotland’s second properties are subject to an additional 3% Land and Buildings Transaction Tax. This applies to all properties regardless of whether they meet the £145,000 threshold.
Mortgages for people with bad credit
If you have poor credit, it can be difficult to begin the mortgage search. However, there are many options for you to choose from when searching for bad credit mortgages in Scotland. You can read our guide to getting a bad credit mortgage or talk to one of our mortgage advisors.
Tenement properties
Tenements make up more than 25% of Scotland’s housing. This is a structure or part of a building that contains two or more flats. They are separated horizontally and can be owned separately. Tenements are houses that have been converted to flats, high-rise blocks, or other traditional or modern buildings, as well as some business premises, which can be classified as tenements.
You will own a part of the common areas and the land that it is situated on if you purchase a flat in a tenement. These areas will be maintained at a cost that you share.
Title deeds for each flat will typically indicate who the owner is. However, if they don’t, some rules will apply. For example, the top-floor flat owner will be the one with the roof space.
Freehold properties costing
This complicated system was abolished in November 2004 for most Scottish properties. However, you should consult your solicitor to ensure it doesn’t apply to your property.
Rates and mortgage repayment plans
Regarding repayment options, getting a mortgage in Scotland is the same as in the UK.
Most lenders offer two types of mortgage repayment plans:
- Repayment mortgage: This is where you borrow money to purchase your property and then repay it with interest.
- An interest-only mortgage where you borrow money from the lender and pay the interest every month, but not the capital amount. Lenders will require that the borrower proves that he or she can afford to repay the mortgage debt in the end.
Remember that you will be determined by the amount of time you are willing to dedicate to repaying the mortgage. Mortgages typically last for 35 years, but in rare cases, you may be able to get a shorter mortgage. However, this will mean higher monthly payments.
Talking to an expert is a great way to get the best mortgage rates for Scotland.
Send us an inquiry, and we’ll contact you at your convenience with an online broker in Scotland. We won’t charge anything for the introduction.
Secured loans
A secured loan may be an option if you want to make home improvements, consolidate debts, or even start your own business.
Depending on your financial situation, you may be eligible to borrow up to £50,000. Specialist lenders may allow you to repay the loan over up to 25-year periods, depending on how high the borrowing is and the amount of the repayments.
A secured loan in Scotland may also be called a second charge mortgage. While you can’t use it for another property, it will be recorded on your title deeds.
Can I get a mortgage for a unique property in Scotland
Each lender is different, but most won’t accept property other than standard or unique. This is usually because they fear the properties will be less saleable and at higher risk.
Some lenders will consider all types of property. Our non-standard property section has more information about unique properties.
Large mortgage loans in Scotland
Big mortgages (or large loans) are generally loans exceeding £500k. Large loans are more restricted than the market. A senior mortgage advisor will refer you to you and approve any loan at their sole discretion.
LTV for large loan mortgages in Scotland is typically 75%. A few lenders offer 80%-85% LTV, while others offer 95% LTV. While some lenders offer flexibility, most limit loans to lower-income multiples.
Remortgaging in Scotland
If your current deal is about to end, or you’re considering switching from an interest-only mortgage to one with repayments, you might remortgage. You might remortgage to make home improvements or consolidate your debt.
You may be charged a fee if you change your deal after it expires. It is also important to accurately calculate any savings. To help you compare deals, you can use the Annual Percentage Ratio of Charge (APRC).
Discharging a mortgage in Scotland
When applying for a mortgage in Scotland, you must sign a standard security document. The security deed is then sent to Registers of Scotland by your mortgage lender to be added to the Land Register (or Sasine Register, if applicable).
You will need to remove your mortgage from the registers if you have sold your property or paid off your mortgage. To avoid problems with selling your property, taking out another mortgage, or passing the property to someone in your will, it is wise to do this as soon as possible.
Do I need to hire a solicitor?
This is a common question that we receive. While it is best to have a solicitor discharge the process, some transactions for owners can submit their deeds themselves.
For digital applications, the mortgage discharge fee is £50; for paper applications, it’s £60. You will be charged £30 if your application is denied. However, a solicitor can help you navigate the process.
Do I need a mortgage calculator?
Online calculators for Scotland mortgages should not be used as a guide. Rate tables don’t indicate available deals because they don’t consider your circumstances. It is therefore difficult to find the best deal for yourself unless you understand the market well.
Can I get mortgage lender help in Scotland?
The Scottish government’s website can be helpful if you have trouble paying a mortgage in Scotland. You can also find information about legal aid, the Support for Mortgage Interest (SMI), and access to legal assistance. The experts we work alongside might also be able to help you by providing bespoke advice or suggesting products that could make it easier, such as a remortgage, secured loan, or other options.
Are you eligible for low-income mortgages in Scotland
Yes, there are many options for low-income mortgages. They are generally the same anywhere in the UK as in Scotland.
Are you thinking of buying property in Scotland? Ask an expert for advice
We have helped over 120,000 people to find the right mortgage. This includes applicants with bad credit histories or who were denied a mortgage.
- They are the whole market.
- Customers buying in Scotland can get personalised advice.
- Establish a working relationship between all lenders
- They have successfully arranged mortgage loans across Scotland and already know which lenders to contact.
- Are fully accredited advisors.
- You have completed the 12-module LIBF-accredited training course.
Our experts could help you save time and money.
Contact us today to get the best advice and mortgage assistance in Scotland.
Relax, and let us find the best Scottish mortgage broker for you. There is no fee, and you don’t have to take any action on your credit rating.