Help for thousands to scale the housing ladder


A Scottish Government guarantee is enabling Scotland's big banks, building societies and house building companies to back a scheme that will help up to 6000 households gain easier access to new homes.

Nationwide and the Royal Bank of Scotland are throwing their weight behind the national mortgage indemnity scheme, developed by home-building industry body Homes for Scotland.

In addition, Bank of Scotland/Halifax will offer mortgages through the scheme in the near future. Twelve house builders have signed up for the scheme and more are expected to follow shortly.

The Scottish Government will support the scheme by providing a guarantee.

It will help households across Scotland who could afford a mortgage on a new build property, but are currently locked out due to high deposit requirements.

It will enable credit-worthy borrowers to access 90 to 95% loan to value mortgages from participating lenders to buy new build homes in Scotland, with a maximum sales price of £250,000.

Homes for Scotland is projecting that the scheme has potential to generate sales of up to £1 billion over three years, and could also create or safeguard 22,800 new construction jobs and over 650 apprenticeships.

According to the Council of Mortgage Lenders, there were 44,000 loans advanced for all home purchases in Scotland in 2011 compared to 105,000 in 2006 – a fall of 60%. 

In Edinburgh, launching the MI New Home mortgage indemnity scheme, Deputy First Minister and Cabinet Secretary for Infrastructure, Investment and Cities, Nicola Sturgeon said:

“The Scottish Government wants to help people get onto and move up the housing ladder, where it is sensible and sustainable for them.

“High deposit requirements have presented a major stumbling block for those who want to buy a new build home.

“That is why securing the backing of our leading lenders for this mortgage indemnity scheme is hugely significant.

“I hope this new scheme encourages lenders to offer more high loan-to-value mortgages to credit-worthy borrowers who are currently unable to put down the large deposits demanded in the current mortgage market.

“This scheme demonstrates yet again that we will do everything that we can within our powers and our resources to get our economy growing, to create jobs and homes, and to challenge the UK Government’s misguided economic policies.”

Homes for Scotland Chief Executive Philip Hogg said:

“With housing output at its lowest level since the Second World War, the main obstacle to recovery in our sector remains constraints on mortgage lending, particularly in relation to high deposits.

“The scale of the problem is highlighted by the fact that Scottish home buyers are having to find an average 25%.  This equates to nearly £40,000 based on an average Registers of Scotland 2011/12 home price of £156,410 – completely unachievable for most people.

“We need new and creative ways of thinking in order to get the marketing moving again and more homes built.  Only through the implementation of innovative measures like MI New Home can we ensure Scots have access to a full range of housing options.”

Andrew Baddeley-Chappell, Head of Mortgage Strategy & Policy at Nationwide says;

“Nationwide is pleased to support MI New Home which offers those with lower deposits a step up on to the housing ladder and helps to provide much needed new housing. 

“Our approach helps to ensure the maximum access to home builders and customers.”

Moray McDonald, RBS Mortgages Director said:

“We are delighted to support the Scottish government, and assist more people to get onto the property ladder with a smaller deposit and fee free. Being ready to go from the outset underscores our commitment. 

“We want to help households who could sensibly and sustainably afford a mortgage on a new build property, but are currently locked out due to high deposit requirements.”

Bank of Scotland/Halifax said:

“As Scotland's leading new build lender, we are fully supportive of the MI New Home initiative. Over the coming months, a range of products specially designed for the scheme will be available through Bank of Scotland and Halifax.

“We are working closely with a number of house builders ahead of our product launch, and look forward to sharing the product details in due course.”

Paul Smee, director general of the Council of Mortgage Lenders, said:

“MI New Home offers a way for home-owners in Scotland to enter the market or move house with a lower deposit than they would otherwise need.

“It increases the options for households who may have been feeling constrained, and offers lenders additional assurance by offsetting some of the risk they would otherwise face.”

Related Information

  • In June 2011, the Scottish Government awarded Homes for Scotland £250,000 to enable it to work with lenders and builders to develop a private sector mortgage indemnity scheme, which is called MI New Home.
  • Subsequently, in March 2012, the Scottish Government announced that it would offer a guarantee to enable the launch of a scheme.
  • The development of the scheme has been led by Homes for Scotland, working closely with the Scottish Government, Council of Mortgage Lenders and insurance specialist Jardine Lloyd Thompson.
  • The 12 builders who will participate in the scheme at launch are:
  • Bancon Homes, Barratt Homes,Chap Homes,Charles Church,David Wilson Homes,Lovell,Merchant Homes,Miller Homes,Persimmon Homes,Springfield,Stewart Milne Homes,Taylor Wimpey.
  • Further details about the MI New Home mortgage indemnity scheme, including eligibility, participating house builders and lenders.