Getting a Mortgage in Scotland

Although buying a house in Scotland differs slightly from in other parts of the UK, getting a mortgage is similar and should be straightforward as long as you meet the lender’s eligibility and affordability criteria.

In this article, we’ll examine the mortgage process, explain how to find the right lender and discuss any mortgage schemes or requirements specific to Scotland.

Are mortgages any different in Scotland?

No, the general principles of getting a mortgage are the same as in the rest of the UK, and you should expect to pay similar rates, as most lenders will be led by the Bank of England base rate. You will find a smaller pool of lenders in Scotland, so using a broker with experience in the Scottish mortgage market will be invaluable.

While a mortgage application in Scotland is similar, there are slight differences in other parts of the house-buying process. For example, you will need a solicitor in place earlier, as they place an offer on your behalf.

Offers become legally binding much sooner, meaning gazumping and the breakdown of buying and selling chains are far less common. Another significant difference is that Scotland imposes a Land and Buildings Transaction Tax (LBTT) rather than stamp duty, and rates can differ from those in other parts of the UK.

How long does it take to buy a house in Scotland?

Buying a house in Scotland is slightly quicker than in England or Wales. From the point of having an offer accepted, you should expect the process to take around 6-8 weeks.

Eligibility criteria and deposit requirements

To qualify for a mortgage in Scotland, you’ll need to meet a lender’s eligibility and affordability criteria. These can vary from lender to lender, but your broker can help you find the most relevant options for your circumstances.

Let’s take a look at the key things a lender will be interested in:

• Affordability – When you borrow money, one of the most important things to consider is whether you can afford to pay it back. Lenders will assess this by looking at your annual salary, some will even consider other income including child maintenance payments, bonuses and some benefits, and factoring in other credit commitments such as loans and credit cards. Most lenders in Scotland work on a maximum loan amount of 4.5 times your annual salary, although in some circumstances, this could be as high as 5 times or even 6 times your salary.
• Credit history – Risk is a big consideration to mortgage lenders, and if your credit reports show a history of late or missed payments, this will be a red flag for them. Past issues aren’t necessarily a deal breaker – you can get bad credit mortgages in Scotland – but you may need to offer a larger deposit or pay higher interest rates, at least initially, to offset the risk.
• Deposit – In terms of deposit requirements, Scotland is pretty much in line with what is expected across the rest of the UK. If a deposit is a struggle, there are a number of 95% mortgages available, so talk to your broker about the right lenders for you in this situation.
• Other factors, such as your employment type, age, property type, savings and investments, and current homeownership status, can all affect the mortgage application process.

To understand how much you can borrow based on property value and deposit, look at our mortgage affordability calculator below. Bear in mind that any figures are for illustrative purposes only, and a broker can provide you with more bespoke calculations.

How to get a mortgage in Scotland

Your first step should be to speak to a mortgage broker with experience and a track record in the Scottish market. Make an enquiry with us, and we will match you with an advisor with these credentials.

The broker we pair you with will guide you through the following steps:

• Preparing the documents you’ll need
• Downloading your credit reports and optimising them
• Finding the right lender and securing the best rate

What schemes are available there?

With average house prices continuing to rise across the UK, including Scotland, it can be difficult for many people to imagine ever being able to afford their own home. Fortunately, there is support available.

These mortgage initiatives are subject to change, so speak to your broker about these or any other support schemes available before starting your mortgage application.

Low-cost Initiative for First-Time Buyers (LIFT)

LIFT is a shared ownership scheme that allows first-time buyers to own a home.

Operating exclusively in Scotland, the LIFT scheme has two strands, both administered by the Scottish government:

• The New Supply Shared Equity Scheme (NSSE) is specifically for first-time buyers and priority access groups to buy property from a local council or housing association.
• The Open Market Shared Equity Scheme (OMSE) is almost identical to the NSSE scheme but is for properties on the open market, not just council or housing association properties.

Lifetime ISA

The Lifetime ISA (LISA) replaced the Help to Buy ISA and allows savers through the UK aged 18-39 to build up money either for retirement or to buy their first home. You can save up to £4,000 a year, and savings will be matched with a 25% bonus from the UK government.

In addition to these schemes, you could also consider a guarantor mortgage, which involves someone (usually a close family member) providing security for your repayments.

Which mortgage lenders are available?

All of the high street banks, like Halifax, HSBC, and Natwest, will be able to offer mortgages in Scotland, but many of the smaller building societies operating in England and Wales don’t extend their offerings north of the border.

Some banks and building societies only restrict their lending to certain postcodes or mainland Scotland. Furness Building Society, for example, limits borrowing to 75% LTV (loan to value) on mainland Scotland only; Leeds Building Society will consider mainland Scotland and the Isle of Skye, while TSB includes the Shetland islands, Orkney islands, outer and inner Hebrides and Clyde islands.

Despite the restrictions and a smaller overall pool of lenders, a good broker will still find plenty of options to compare, and you should be able to get a product that suits your particular circumstances.

Remortgaging a property

Remortgaging in Scotland works the same way as getting a mortgage for a new property. Lenders will consider your ability to afford, credit history, and other financial commitments.

When you’re remortgaging, the difference is that you’ll often already have equity in your property, which can count as your deposit. Having significant equity can open up better rates, as you’ll be borrowing at a lower LTV. This also allows you to remortgage for more than your current loan amount, releasing equity for home improvements or other expenses.

Get matched with a Scottish market mortgage broker

Because the number of mortgage lenders in Scotland is lower than in other parts of the UK, it pays to get help from a broker with specific experience in the Scottish mortgage industry. They will understand the local market and may have relationships with lenders, meaning they will be well-placed to find you the best rates and terms.

Our broker matching service can help you find a broker with experience in Scotland. Call 0330 818 7026 or make an online enquiry now, and we’ll match you with an advisor who is best placed to guide you through the process.