Open Market Shared Equity Scheme: buyer information leaflet

How much will you be expected to contribute towards the purchase price?

The amount that you contribute must be the maximum mortgage you can reasonably obtain and afford plus any personal deposit contribution that you are able to make towards the purchase price. In addition to this requirement, any amount over valuation must be cash funded and must still be within the price threshold.

You should be aware that if you opt to pay over the Home Report Valuation, the equity percentage that the Scottish Government hold is based on the property valuation at point of purchase. When selling the property, the Scottish Government equity stake is calculated as a percentage of the sale price. If you wish to increase your equity stake while you still own the property, the Scottish Government equity stake is calculated as a percentage of the latest valuation.

If you are aged 60 or over, there is no requirement to take out a mortgage but you must contribute as much as you can to towards the purchase price. This includes all proceeds of the sale from any existing or previous property and the majority of your savings (see below regarding personal contributions).

You will be provided with information on the expected level of finance that you should be able to raise. You should not exceed this level and throughout the whole process you should speak to an independent financial advisor to make sure that you can pay your mortgage over the long term, even if mortgage interest rates or other living costs increase.

Example

If you are eligible to purchase a home up to a maximum price of £100,000 and you can afford to contribute £70,000 (the maximum mortgage that you can raise plus any personal contribution) you would hold a 70 per cent stake in your home and the Scottish Government would provide assistance of the remaining £30,000.

When you apply to buy a house, you will have to state all your sources of finance. Your funds will be considered to be the total of:

• gross earnings, per single person or couple, as appropriate;
• any other income, comprising sickness benefit, unemployment benefit, bank interest, superannuation or pension from previous employment, working families tax credit, widow's pension and shareholder's profits; and
• personal contributions.

Personal contributions may include, for example, savings and gifts. The definition of savings that we use includes: cash; premium bonds; stocks and shares; unit trusts; bank or building society accounts and fixed-term investments; the surrender value of any endowment policies; property; redundancy payments; and pension lump sum payments.

You may retain £5,000 of any personal contribution you can make to help you to fund the costs of buying your home (such as your legal costs, registration fees, mortgage arrangement fees and any removal costs). For any personal contribution above this amount, 90 per cent of your funds must be treated as a deposit contribution towards the cost of your home.