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Mortgage to shared equity

Mortgage to shared equity is part of the Scottish Government Home Owners's Support Fund. The fund helps home owners who can no longer afford their mortgages.

Eligibility for the mortgage to shared equity scheme

Before you can apply to the scheme, you must first have discussed your situation with both your lender and an independent money adviser (for example, at a Citizens Advice Bureau or money advice centre) and explored alternative means of reducing your arrears and making the mortgage more affordable (for example, by taking a payment holiday, increasing the term of the mortgage and/or making a repayment arrangement).

In addition, in order to be considered for the scheme, you and the property must meet the following criteria:

  • you must be at least three months in arrears on their mortgage, and be unable to reach a suitable repayment arrangement with your lender
  • not have a trustee appointed to your easte
  • hold at least 20% equity in your home
  • you can't have more that £2000 in capital, or £4000 if you are over 60
  • your home must not be valued above a set level and must be adequately insured and meet the minimum standard of repair
  • your property must be the your main home.

How to apply

Your completed mortgage to shared equity application form and any supporting documents (such as mortgage statements) should be sent to the Scottish Government.

After applying

On receipt of the application, the Scottish Government will commission a valuation of your property and establish the amount of debt secured against the property. If you have at least 25 per cent equity in the property, your application will be passed to a financial adviser acting on behalf of the Scottish Government.

The adviser will then work out the amount of equity the Scottish Government will need to take in the property to reduce the your debt to a manageable level, taking into account your incomings and outgoings, then an offer will be made to you.

You must then decide whether this offer will allow you to manage your debt adequately. In reaching this decision, you should consult an independent money adviser, and talk to your solicitor and lender.

Rejecting the offer

If you feel the offer will not sufficiently reduce your debt, you can turn it down. You then have the option of applying to the mortgage to rent scheme.

Accepting the offer

If you accept the offer, your solicitor will work with Scottish Government lawyers to draw up the legal documentation required. You must also arrange with your lender a new mortgage for the newer, smaller stake in your property.

Repeat applications

If your application is successful, you cannot apply to the scheme again.

Buying back the property

After two years, you will be able to buy back all or part of the stake owned by the Scottish Government.

Selling the property

If you decide to sell the property, the Scottish Government will take its share of the sale price.

Where can I get more information?

You can get more information from the Are you in danger of losing your home information leaflet from the Scottish Government website.

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The important points

  • The mortgage to shared equity scheme allows you to reduce your secured debt in the property but keep a stake in your home.
  • You must have discussed your situation with both your lender and an independent money adviser before you apply and there are limits on the amount of capital you are allowed to have to be eligible.
  • You can reject the offer to buy your home and apply to the mortgage to rent scheme instead.
  • You must have at least 25% equity in the property to apply for the shared equity scheme.

If you're still looking for help, try searching, or find out how to contact us

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