Scottish Building Society can offer a mortgage to help young First Time Buyers get their foot on the property ladder. We have designed this product to allow young people who may not earn a sufficient salary in their own right, to buy their first home with the help of a parent or parents acting as guarantor(s).
People looking to buy their first residential property throughout Scotland.
For all applications we will require the parent(s) to act as guarantor for the mortgage where borrowing above 70% of the property value is required.
Mortgages are available for owner occupied residential properties.
All mortgages are subject to a suitable property valuation. For property purchases in Scotland, we can normally use the property valuation contained in the sellers’ Home Report as long as it is no more than 12 weeks old.
We can lend up to 90% of the purchase price or property valuation (whichever is lower). The minimum loan size is £50,000 and the maximum is £300,000.
Applicants must be at least 18 years old on application and the maximum age at the end of mortgage term is normally 85.
Minimum mortgage term is 5 years and maximum term is 40 years.
The parent(s) acting as guarantor must not be older than 65 at the time of application, and be able to provide confirmation of a sustainable income stream into retirement (if appropriate).
How much can I borrow?
All mortgage applications are based on affordability. For loans up to 80% – As a guide we will lend up to:
- Main income x 4.5, plus second income x 1 OR
- Joint income x 3.5
For loans over 80% of the property valuation or purchase price (whichever is the lower) we will lend up to:
- Main income x 4 plus second income x 1 OR
- Joint incomes x 3
Monthly payments on the difference between the affordable amount, calculated as above, and the required loan may be met by a monthly parental contribution (see below).
We require a Letter of Support from the parent(s) making the monthly contribution to mortgage payments.
As responsible lenders, when considering the application we assess the financial position of both the applicant and the parent(s) giving support.
The annual income of the parent(s) giving support must be at least £30,000, and must be sufficient to cover the support plus any existing mortgage or finance commitments they have in their own name. Any existing financial commitments of both the applicant and the parent(s) will be taken into consideration when affordability is calculated.
- Capital and Interest OR
- Interest only – available up to 75% of the property value or purchase price (whichever is lower) subject to the maximum loan size of £300,000. We will ask for confirmation that the borrower has an appropriate repayment vehicle in place at the time of application as well as periodically throughout the life of your mortgage. Acceptable repayment vehicles are endowment policies, stocks and shares ISAs, pension lump sums and second/investment properties. (Acceptable Repayment Vehicles).
Security for any mortgage granted will be as follows:
- A first charge will be taken over the property being purchased as security for the mortgage lending.
- Parental Letter of Support for monthly payments – required to support any borrowing above normal affordability on the applicants own income.
- Parental Guarantee from the parent(s) acting as guarantor for borrowing in excess of 70% of the property value or purchase price (whichever is lower).
- Please note the guarantee could be for a limited amount or to cover the full mortgage.
It is a requirement that the guarantor takes independent legal advice to ensure they fully understand the legal obligation of providing a guarantee.
Overpayments of up to 10% of the mortgage advance can be made per annum. An early repayment charge, equivalent to 3% of the total amount overpaid, will apply if overpayments exceed 10% of the loan amount in any 12 month rolling period during the first 3 years of the mortgage.
Buildings Insurance must be arranged prior to funds being released.
FOR INTERMEDIARY USE ONLY