Buying a home

This information applies to Scotland.

Buying a home can involve a lot of decisions. You’ll need to think about:

• what you can afford

• whether you need a mortgage

• what checks to make on a property

• how the legal process works.

If you have problems during the process, you can read about problems with buying and selling a home.

How much can you afford

The first thing to do is work out how much you can afford to spend. You should make a budget using your income and spending. If you’re buying with someone else, make a joint budget using both your incomes and spending.

You should think about:

• mortgage payments - how much you can afford to pay each month

• other housing costs - for example council tax, service charges, insurance and repairs

• one-off buying costs - for example legal fees, surveys, tax and moving costs

• future changes - for example if interest rates rise or your income changes.

You can use the budget planner on the MoneyHelper website to help work out what you can afford.

Find out how much you can borrow

You might be able to borrow money to buy a home. This is called a mortgage. Mortgages can be available from:

• banks

• building societies

• financial institutions - for example lenders that offer mortgage products

• specialist mortgage companies - lenders that offer mortgages in more complex situations.

A lender will usually ask for evidence of your income before deciding how much it might lend. If you’re employed, you might need to provide payslips or information from your employer. If you’re self-employed, you might need to provide accounts or tax information.

Some lenders can give you an agreement in principle. This is a document that says they might lend you a certain amount if the property is suitable and you pass their checks. It can help show a seller that you’re likely to have the money available.

You should only borrow what you can afford to pay back. If you do not keep up the agreed repayments, the lender can take possession of the property.

Extra costs to budget for

Before deciding how much to spend on a home, check that you can afford the extra costs of buying it.

One-off costs can include:

• survey or valuation fees - if you or your lender need a survey or valuation as well as the one in the Home Report

• specialist reports - for example if a survey suggests there might be problems with the property

• tax and registration costs - including Land and Buildings Transaction Tax and land registration fees

• mortgage costs - including lender fees, broker fees or a mortgage indemnity insurance premium

• legal costs - including solicitor’s fees, search fees, expenses and VAT

• moving costs - including removal costs, mail redirection and final bills from your current home.

You might still have to pay some costs if your offer is not accepted or the purchase falls through. For example, you might have to pay for a survey, valuation or legal work that has already been done.

You can ask your solicitor if they offer a no-purchase-no-charge arrangement. If they do, check exactly what you’ll have to pay if the purchase does not go ahead.

Ongoing costs in a new property

You should also think about the running costs of the new property. These might be higher than your current costs, especially if you're moving to a larger home.

Ongoing costs can include:

• mortgage payments

• heating and energy bills

• council tax

• insurance - such as buildings insurance, contents insurance and life insurance

• service charges - for example factors fees, lifts, gardens or common areas.

• repairs and maintenance - including any shared responsibility for common repairs.

The Home Report for the property you’re buying will include some information which can help you work some of these costs.

Summary of steps in buying a property

These steps are not rigid. For example, you may know exactly what property you want to buy before you have chosen a solicitor. However most of the steps will be part of the process you go through to buy a home. You have to use a solicitor or qualified conveyancer to buy the home legally. Once you have chosen the solicitor or conveyancer they will help you through the whole process.

Step 1: Choosing a solicitor or conveyancer

Step 2: Investigate getting a mortgage or loan

Step 3: Look for a property

Step 4: Deciding on a property

Step 5: Get the Home Report

Step 6: Get a survey – if needed

Step 7: Making an offer

Step 8: Closing date is set (unless no-one else is interested)

Step 9: Offer is accepted

Step 10: Completion – part of the completion is the setting of an entry date which is usually negotiated. Other terms can be discussed at this stage.

First-time buyers

Buying a home for the first time can often be a daunting experience but there's lots of information to help you through the process.

You can get money tips in the first-time home buyer guide on the MoneyHelper website.

There's a guide to buying a house on the Which? website.

Deals on new-build homes

Some builders of new-build homes may offer a deal with extra costs covered, for example, Land and Buildings Transaction Tax and solicitor's fees or new furniture, as well as arranging the mortgage. You should get independent advice to check if the deal is financially worthwhile. A local conveyancing solicitor should be able to provide this advice. Although you are likely to have to pay for this extra advice it may protect you from a financial problem with the value of your home in the future.

You might also qualify for Help to Buy from the Scottish government.

Help to buy a home schemes

The Scottish government offers a number of schemes which may be able to help you buy a home if you cannot afford one.

Can I get help

The Scottish government currently offers support in buying a home to those in the following priority groups and who meet other eligibility criteria:

• first time buyer

• over 60 years old

• a social renter (someone who rents from the council or housing association)

• disabled

• in the armed forces

• a veteran, who has left the armed forces within the last 2 years

• a partner of armed forces personnel, where they lost their life whilst serving within the last 2 years.

What type of home can I buy

If you're eligible for help then you may be able to buy:

• a house for sale on the open market - more about the Open Market Shared Equity scheme on mygov.scot

• a new build house from a housing association or local council - more about the New Supply Shared Equity scheme on mygov.scot. This scheme may also be available to previous home owners if they've experienced a significant change in circumstances.

Will I own my home

The Scottish government will own some of the equity in your home as it has paid some of the cost of buying the property. It will hold a share in your home, like a mortgage. You will own your home but will have an agreement as to how you pay the Scottish government back.

How much do I have to pay

The amount you'll have to pay towards buying the home and how much the government will pay may vary depending on the scheme and other factors. 

You'll be responsible for paying all the ongoing costs for the property, such as:

• mortgage payments

• any service charge, for example towards the upkeep of the communal parts of a flatted development

• repairing, maintaining and insuring the property

• council tax

• heating, lighting and water charges.

You can find out more about the Help to Buy schemes on mygov.scot.  

What if my income is too low for these schemes

If your income is low and you cannot afford the shared equity schemes to help you buy a home, then the Shared Ownership scheme from the Scottish government may be able to help you. There's more about Shared Ownership on mygov.scot.

Forces Help to Buy

Throughout the UK, the Forces Help to Buy scheme allows service men and women to borrow up to 50% of their salary, interest free, to buy their first home or move to another property on assignment. The maximum loan is £25,000 and it can be used towards a deposit and other costs such as solicitor’s and estate agent’s fees. Find out more on the Forces Help to Buy scheme on GOV.UK.

Get legal help

The legal process of transferring ownership from the seller to the buyer is called conveyancing.

You'll usually need a solicitor or qualified conveyancer to complete this work. They can explain the process, protect your interests and make sure the legal documents and checks are completed correctly.

You can arrange some things yourself, such as your mortgage or insurance. However, you'll not usually be able to:

• submit a formal offer - this must usually be sent by your solicitor or qualified conveyancer

• prepare mortgage documents

• check the title deeds - this includes preparing the document that transfers ownership to you, called the disposition

• check official records - this includes checking for debts, restrictions or legal obligations attached to the property.

If you decide to do any tasks yourself and make a mistake, you might not be able to claim compensation from your solicitor or qualified conveyancer.

Choose a solicitor or qualified conveyancer

You should contact more than 1 solicitor or qualified conveyancer before choosing who to use. Ask friends or relatives for recommendations, and consider using someone with knowledge of the local housing market.

Before choosing someone, check:

• fees - whether the quote is fixed or depends on how much work is involved

• what’s included - whether the quote includes tax, searches, registration fees, expenses and VAT

• failed sale costs - what you’ll pay if the sale falls through

• local knowledge - whether they know the area where you want to buy

• lender panel - whether they’re on your mortgage lender’s approved conveyancing panel, if the lender uses one. If they're not, you might need another solicitor to carry out the lender's conveyancing work. This can add costs.

Some solicitors offer a no-purchase-no-charge arrangement. If your solicitor offers this, ask for the arrangement in writing. Check which charges and expenses you’ll still have to pay if the purchase does not go ahead.

You cannot use the same solicitor as the seller because the solicitor cannot act for both buyer and seller. However, sometimes solicitors from the same law firm act for the buyer and seller. If you're worried about a conflict of interest, you should speak to your solicitor. If you're still worried, you might consider changing solicitor. This could mean paying for work already done and could slow down the purchase.

You can get lists of solicitors and qualified conveyancers from the Law Society of Scotland.

What the solicitor or conveyancer does

A solicitor or qualified conveyancer can:

• explain the process - discuss your needs and explain the procedure and costs

• deal with the offer - note your interest, draw up the formal offer and negotiate with the seller’s solicitor

• check the property - check title deeds, searches, legal ownership and local council records

• check permissions - for example whether alterations had planning permission or building warrants

• deal with money - prepare mortgage documents, receive purchase money and pay it to the seller’s solicitor

• prepare documents - including the disposition that transfers ownership to you.

They can also help if there is a dispute before completion.

For information about problems with solicitors and conveyancers, see problems with buying and selling a home.

Mortgages

If you wish to buy a home you may be able to borrow money to do this. This is called a mortgage. The loan is for a fixed period called a term and you have to pay interest on the loan. If you do not keep up the agreed repayments, the lender can take possession of the property.

Types of mortgages

There are two basic types of mortgage available - repayment mortgages and interest-only mortgages.

Repayment mortgage

This is a mortgage in which the capital borrowed is repaid gradually over the period of the loan. The capital is paid in monthly instalments together with an amount of interest. The amount of capital which is repaid gradually increases over the years while the amount of interest goes down.

Interest-only mortgage

With this type of mortgage you pay interest on the loan in monthly instalments to the lender. Instead of repaying the loan each month, you pay into a long-term investment or savings plan which should grow enough to clear the loan at the end of the mortgage term. However, if it doesn't grow as planned you will have a shortfall and you will need to think of ways of making this up.

You can find further information about interest-only mortgages, repayment plans and shortfalls on the MoneyHelper website.

Islamic mortgage

With an Islamic mortgage none of the monthly payments includes interest. Instead, the lender makes a charge for lending you the capital to buy your property which can be recovered in one of a number of different ways, for example, by charging you rent.

You can find more advice about Sharia-law-compliant home finance and purchase plans on the MoneyHelper website.

Can you afford a mortgage

Lenders must make sure you only take out a mortgage you can afford. This means that they'll ask you for lots of information and proof on your income, outgoings and spending habits.

Lenders will check to see if you can meet the initial mortgage repayments and other property costs. They also consider how you would cope financially if interest rates were to go up in the future, or if there was a change in your income because, for example, you wanted to start a family or retire.

More about what a lender will do to check if you can afford a mortgage on the Financial Conduct Authority's website.

Where to get a mortgage from

A mortgage could be available from a number of different sources. Some of the available options are:

• building societies

• banks

• financial institutions

• specialised mortgage companies.

If you’re thinking about taking out a mortgage you should make sure you look into all the different options available and that you only borrow what you can afford to pay back. If you do not keep up the agreed repayments, the lender can take possession of your property.

Find out more about mortgages on the MoneyHelper website.

If in doubt, you may want to consult an independent financial adviser. Check how to choose a financial adviser on the MoneyHelper website.

Specialised mortgages

As well as standard mortgage deals, lenders might also offer deals which are designed for people who don’t qualify for a standard mortgage. This type of deal is known as a 'sub prime' or 'adverse credit' mortgage. These mortgages are aimed at people who have had financial difficulties or credit problems in the past. For example, you might have had a previous home repossessed or have been declared bankrupt. You might also have difficulty proving that you have a regular or reliable income.

Sub prime and adverse credit mortgages usually charge a higher rate of interest than standard mortgages. Lenders may also limit the amount of money they are prepared to lend you.

Before taking out a sub prime or adverse credit mortgage, you should get some independent financial advice.

Using a broker to get a mortgage

Instead of going directly to a lender such as a building society for a mortgage you could use a broker such as an estate agent or a mortgage or insurance broker. They will act as the agent to introduce you to the source of mortgage loan.

If you use a broker it may save you time shopping around. However, some lenders only offer products directly to customers. A broker may not be in a position to offer such deals to you.

A broker must tell you if there are limits on the range of mortgages that they can recommend. For example, they must tell you if they restrict recommendations of mortgages to only what is available from particular lenders rather than the whole mortgage market.

A broker may be used when it could be difficult obtaining a mortgage directly from a lender, for example:

• the mortgage required is particularly large

• the property is unusual in some way

• more than two people wish to jointly purchase the property

• the applicant is self-employed and their income fluctuates.

There are rules about how much a broker can charge for their services. Brokers must not discriminate against you because of your age, race, sex, disability, religion or belief, gender reassignment, pregnancy and maternity or sexual orientation when they are offering you their services.

Find more information about mortgage brokers on the MoneyHelper website.

There is also information about getting mortgage advice on the Financial Conduct Authority's website.

Making a complaint about a mortgage lender

If you want to complain about a mortgage lender or broker, you have to firstly discuss the problem with them. After this initial attempt to solve the problem, if you are still dissatisfied, you can consider making a formal complaint. If you think the mortgage lender or broker has discriminated against you, you can complain about this as well. Each lender or broker should have its own internal complaints procedure. If you have followed this procedure and are still not satisfied, you can take your complaint to the Financial Ombudsman Service.

Find out more about making a complaint on the Financial Ombudsman Service website.

How to find a property

There is a number of ways in which someone could find a property to buy:

• using estate agents or solicitors’ property departments

• visiting the local solicitors’ property centre

• looking at property pages in local newspapers

• contacting property building companies for details of new properties being built in the area.

Deciding on a property

When you find a property you are interested in you should arrange to look round it to make sure it meets your requirements. You will need to get some idea of whether or not you will have to spend any additional money on the property, for example, on repairs or decoration. It is common for a potential buyer to visit a property two or three times before deciding to make an offer.

Check the property before you buy

Before you decide to buy a home, check its condition, energy efficiency, flood risk and legal paperwork. These checks can help you identify problems, understand potential costs and decide whether the property is right for you.

Check the Home Report

Most homes marketed for sale in Scotland must have a Home Report. The seller is usually responsible for producing it, unless they have appointed an agent and transferred responsibility to them.

A Home Report has 3 parts:

• single survey - a surveyor’s report on the condition of the property, its value and accessibility

• energy report - information about energy use, carbon dioxide emissions, recommended improvements and possible savings

• property questionnaire - information from the seller about the property, such as council tax, parking, services, notices, common parts, factoring, alterations and guarantees.

The surveyor who prepares the single survey has a legal responsibility to provide accurate information to both the seller and the buyer.

The Home Report should be prepared before marketing starts. If a property has been off the market for no more than 28 days, the seller does not have to update the Home Report documents.

A Home Report must be provided to a potential buyer within 9 days of the seller receiving the request and any payment due.

You can read more about the Home Report on mygov.scot.

If a Home Report is not needed

A Home Report is generally needed when a home is marketed for sale. It might not be needed where a property is sold privately and has not been marketed.

Some types of property might not need a Home Report, including:

• new homes - if they have not been occupied before and are marketed for the first time

• recently converted homes - if the property has recently been converted into a house

• commercial-style sales - for example a portfolio of residential properties sold as a commercial sale

• seasonal accommodation - if it’s restricted by planning conditions.

Check the Energy Performance Certificate

When you buy a property, you should get an Energy Performance Certificate free of charge.

If the property needs a Home Report, the Energy Performance Certificate is included in the energy report. Property adverts must include Energy Performance Certificate information.

An Energy Performance Certificate gives information about:

• energy efficiency - the property’s current energy rating

• energy use - how much energy the property is likely to use

• carbon emissions - the property’s carbon dioxide emissions

• recommended improvements - changes that could make the property more energy efficient.

There is no obligation to make the recommended improvements.

An Energy Performance Certificate is valid for 10 years. If the seller fails to provide one, or does not include the rating when advertising the building, they could face a penalty charge notice of at least £500. You can read more about Energy Performance Certificates on the Energy Savings Trust website.

The Energy Performance Certificate and recommendations report must include details of any Green Deal plan attached to the property. This is because the new owner will have to take over repayments for any existing Green Deal loan. You can find out more about Green Deal at Green Deal funding for energy efficient home improvements.

Check alterations and repairs

Check whether the property has been modernised or altered. If it has, your solicitor or qualified conveyancer should check whether the work had any planning permission, building warrants or completion certificates that were needed.

A completion certificate shows that work was carried out in line with building warrants. It does not guarantee the structural quality or standard of workmanship.

You or your solicitor should ask the seller about major repairs. If the property is a flat, ask how repairs are shared between owners and whether there are any outstanding statutory repair notices.

Check flood risk

Ask your solicitor to investigate whether the property is in a high flood risk area or has been flooded in the past. A history of flooding can increase insurance premiums or make it difficult to get insurance. You can read more about  problems getting insurance.

The Scottish Environment Protection Agency (SEPA) has flood maps that show community-level flood risk in Scotland. You can find flood maps on the SEPA website.

SEPA's flood maps cannot be relied on to establish flood risk for an individual property. You could find out more about flood risk to the property you're buying by speaking to neighbours and contacting the local council.

Getting a survey

If you are buying a property which has a Home Report you will get the single survey as part of the Home Report. The surveyor who produces the single survey has a legal responsibility to provide accurate information to both the seller and the buyer. The single survey is broadly the same as a scheme 2 survey.

You should consider getting your own survey as well as the seller's single survey especially if you have any concerns about the condition of the property. If you are buying the property with a mortgage, the lender may insist on having a survey for mortgage assessment carried out, to be paid for by the buyer. There are three main types of survey, or inspection which you can get:

• mortgage valuation report (scheme 1 survey). A mortgage valuation is the least expensive type of inspection and provides a valuation of the property for the purposes of getting a mortgage

• home buyers report (scheme 2 survey). The home buyers report will consider not only the value of the property but will also examine the structure of the property and should identify any existing or potential problems

• full structural survey (or buildings survey). A full structural survey is expensive but provides a thorough and detailed inspection of the property.

The buyer’s solicitor should ensure that the surveyor is a member of:

• the Royal Institution of Chartered Surveyors, or

• the Incorporated Society of Valuers and Auctioneers, or

• the Incorporated Association of Architects and Surveyors.

If the surveyor reports that there are some problems with the property, you will have to consider whether you still want to go ahead with the purchase. In some cases it may be necessary to ask a builder or other workman to estimate the cost of carrying out necessary repairs.

Check new-build warranties

If the property is newly built, check whether it has a Buildmark warranty from the National House-Building Council.

The Buildmark scheme can property your money if the builder foes bankrupt after contracts have been exchanged but before completion. It can also cover defects that arise because the builder has not followed National House-Building Council standards. You can read more about the Buildmark scheme on the National House-Building Council website.

If you buy a new or newly converted home, make sure a full new-home warranty will be in place before completion. If you have problems with a new-build property during the warranty period, you might be able to get help from the:

• National House-Building Council - or another warranty provider

• New Homes Ombudsman Service

• Consumer Code for Home Builders – a voluntary code which applies to some builders.

You can read more about the Consumer Code for Home Builders on their website.

If you want to take further action about problems with a new-build property, you should consider getting legal advice from a solicitor.

Making an offer

If you decide to make an offer, it should include:

• a brief description of the home you want to make an offer on

• the date you want to collect the keys and move in

• the price you want to pay for it

• any items you want to buy from the seller

• any other conditions you have - for example, you might want to get a second survey done if your solicitor or conveyancer thinks this is necessary.

Your offer must be sent as a letter from your solicitor. The seller will then consider the offer.

If the property is advertised at a Fixed Price, this means that the seller is willing to accept the first firm offer at the price specified.

If the property is advertised at an Upset or 'offers over' price, this means the figure specified is the minimum the seller would be willing to accept. The seller will normally wait until a number of people have expressed an interest in making an offer and then announce a closing date. Sealed offers are submitted on that date and the seller chooses the best one, which is often the highest amount.

Acceptance of offer

If you have made an unconditional offer for the property this will normally be accepted or rejected by the seller straight away. Usually, however, the acceptance will contain a number of conditions and there will be no binding contract until all of those conditions have been accepted by your solicitor.

Completion

A binding contract has been agreed when all the conditions of the offer have been accepted. This is called 'concluding the missives'. Your solicitor will complete the conveyancing procedures and prepare a number of documents, particularly a 'disposition' which will transfer ownership of the property to you. The contract or Missives will specify the date of entry to the property. This is the date on which you will have to pay the seller the purchase price of the property in return for the Disposition and the keys to the property. Your solicitor will make all the arrangements for settling the transaction on the date of entry. This is called ‘completion’ of the purchase.

Withdrawing from the sale

You might want to withdraw from the sale before the contract has been completed. This is usually a matter for negotiation between your solicitor and the selling solicitor. This is because; although the contract hasn’t been completed, some costs may have been incurred for example, the seller may have extended warranties to accommodate you with a late entry date.

If you are wanting to withdraw from the purchase after the sale has been concluded you are unlikely to do so without incurring costs. The costs you incur may be damages from breaking the contract of sale. However a landmark ruling in court (July 2013) ordered the purchasers to pay the full asking price for dropping out of the contract. You must discuss the possible consequences of wanting to withdraw from the contract with your solicitor or qualified conveyancer.