What kind of mortgage options are available to first-time buyers in Scotland?

Scottish Mortgage Podcast

As a first-time buyer in Scotland, it can be overwhelming to navigate the different mortgage options available. As a buyer with so many choices out there, it's important to understand the key differences between them and what might be the best fit for your circumstances. In this blog post, we'll provide an overview of the various mortgage options available to a first-time buyer in Scotland.
Fixed-rate mortgages: This type of mortgage is the most popular among first-time buyers in Scotland. With a fixed-rate mortgage, you'll have a guaranteed interest rate for a set period of time, usually two to ten years. This stability in your mortgage payments can be helpful when you're just starting out as a homeowner. However, fixed-rate mortgages can come with early repayment charges if you try to come out of the deal early, and you could end up paying a higher mortgage rate if interest rates drop during the fixed-rate period.
Tracker rate mortgages: Tracker rate mortgages follow the Bank of England base rate at a certain percentage, either above or below it. They offer more flexibility than fixed-rate mortgages, with many lenders allowing you to leave the deal without penalty or fees. However, tracker rates are variable interest rates that can go up and down over time.
Discounted variable rate mortgages: These types of mortgages offer a discount on the lender's variable rate for a set period of time. The lender is in control of the variable rate, which doesn't always follow the Bank of England base rate. These deals can be similar to fixed-rate mortgages and often come with penalties if you leave them early.
The Lift scheme: The Lift scheme is an initiative run by Link Housing in Scotland. It allows first-time buyers, low-income families, and people in the armed forces to buy their first home at a discounted price. Essentially, you can pay market value but get the property for much less, sometimes avoiding deposits. The government guarantees the other part of the scheme, which is a shared equity scheme for new builds.
The Mortgage Guarantee Scheme: The Mortgage Guarantee Scheme is a government initiative that allows people to buy a house with a 5% deposit. Some lenders use the scheme, some don't, but it's best to go with the lender that you meet the criteria with, whether they're using the scheme or not.
Genuine bargain price: If you're renting a property, you may be able to buy it from your landlord at a discounted price. This can be a good option, especially with rising rent costs or if landlords are selling up. You may also be able to buy a property at a discount from a family member.
Deposit options: Deposit options can include personal loans, gifted deposits from friends, standard savings, and more. As long as it factors into affordability, you may be able to take out a personal loan and use it as a down payment. Some lenders also accept gifted deposits from friends, not just family.

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