How To Get A Mortgage In Scotland
30th June 2017
Getting a mortgage in Scotland involves identifying your budget, finding a suitable mortgage lender, and securing a Mortgage in Principle. Once you’ve found a home you like and you’ve had an offer accepted, you’ll need to inform your mortgage broker or lender so that they can start processing your mortgage application.
Getting a mortgage in Scotland is similar to the mortgage process in other parts of the UK. However, the Scottish property purchase process and the rules around selling and buying are slightly different in Scotland. Here’s how it works…
How much can you afford to borrow?
The first step in any mortgage application process is working out how much you can borrow, and the total amount you can spend on a home based on your deposit plus your mortgage amount. There are lots of tools available to help you work this out, including Trussle’s mortgage affordability calculator.
When you’re doing your sums, remember to take into account the various costs of buying a home and moving, including mortgage fees, legal fees, and tax. Instead of Stamp Duty Land Tax (SDLT) which applies in the rest of the UK, buyers in Scotland have to pay Land and Buildings Transaction Tax (LBTT) on property purchases over £145,000.
Getting a Mortgage in Principle
Once you know how much you can borrow, the next step is to get a Mortgage in Principle from a mortgage broker or lender. This is a document that states that - in principle - the lender is willing to give you a mortgage of a certain amount. To get it, you’ll need to provide certain personal and financial details.
You’ll need a Mortgage in Principle to show sellers that you’re a serious buyer.
It’s important to understand that a Mortgage in Principle isn’t a guarantee that your mortgage application will be approved. You’ll submit your final mortgage application once you’ve had an offer accepted on a property.
Finding a property
Once your Mortgage in Principle is in place, you need to find a conveyancing solicitor who’s familiar with Scottish property law. Your mortgage broker or lender may be able to help you find a solicitor.
When you find a home you like, your solicitor will register a ‘note of interest’ with the seller’s agent, and you’ll be told if there’s a ‘closing date’. This is the date by which potential buyers must have submitted an offer.
Your solicitor will also ask for a copy of the Home Report, which Scottish sellers are required to provide. The Home Report includes a survey on the condition and value of the property, an energy report, and the answers to a property questionnaire.
Making an offer
An offer needs to be made by your conveyancing solicitor in writing to the seller’s agent, including information like the price and your anticipated moving-in date. If your offer is accepted, you’ll need to inform your mortgage broker or lender so that they can start processing your mortgage application.
Once all the contract details are agreed between the seller’s solicitor and the buyer’s solicitor, the solicitors exchange letters known as ‘conclusion of missives’. At this point both parties are legally committed to the transaction.
In England and Wales, ‘gazumping’ is quite common. This is when an offer is accepted by a seller, but then another buyer comes in with a higher offer. This is less common in Scotland, as Law Society of Scotland rules say that once a solicitor accepts an offer on behalf of their client, they can’t accept an offer from a different buyer.
The mortgage valuation
Your mortgage lender will ask for further information and documentation to complete your mortgage application. They’ll also want to check that you’re paying the right amount for the property.
They may be satisfied with the valuation from the Home Report, or they may want to arrange their own valuation of the property. If they arrange a separate mortgage valuation, you’ll usually have to pay for this.
You may also decide to arrange a building survey to get a more detailed report of the structure and condition of the property.
Meanwhile, your solicitor will be carrying out checks and searches as part of the conveyancing process. This includes looking at property registers and checking with the local authority to make sure there are no ownership or planning issues.
Formal mortgage offer
Once your lender is satisfied with the valuation report, the information in your application, and the results of the searches, they’ll make a formal mortgage offer. You then accept the offer, and the solicitor can continue with the conveyancing work to transfer ownership of the property from the seller to you.
‘Settlement’ is the final stage of the conveyancing process, and it’s when the money is paid for the property and you get the keys! This stage is called ‘completion’ elsewhere in the UK.
The settlement date will have been agreed as part of the missives negotiation. On this date, the money for the property (including both your deposit and your mortgage) is transferred from your solicitor to the seller’s solicitor. Make sure that your lender knows the settlement date so that they can release the funds at the right time.
Using Trussle to get a mortgage in Scotland
If you’re buying a home in Scotland, Trussle can help. We’ll provide you with a downloadable Mortgage in Principle, search through thousands of mortgage products to find one that suits you, and manage your mortgage application to settlement. We’ll even continue to monitor your mortgage, alerting you when it’s time to switch to a more suitable deal later on.