Skip to the content

MI New Home - Mortgage Guarantee New Build

MI New Home - Mortgage Guarantee New Build

The Mortgage Indemnity (MI) New Home Scheme is for people in Scotland who wish to buy a new build home but don’t have the level of deposit that most developers require. Under the MI New Home Scheme, mortgages of 90-95% loan to value are available for certain new build properties up to £250,000. The scheme is not restricted to first time buyers, so can help those who are struggling to fund their next step up the ladder.

The MI New Home Scheme – who is eligible?

To be eligible for the MI New Home Scheme you must:

  • Be a UK citizen or have indefinite leave to remain in the UK
  • Be able to provide a deposit of 5-10% without any public assistance
  • Be able to afford a mortgage of 90-95%
  • Have a good credit rating.
  • The MI New Home Scheme – what properties are eligible?

To be eligible for the MI New Home Scheme the property must be:

  • New-build
  • Located in Scotland
  • Your main home and only property – second homes and buy to let are not eligible
  • Worth no more than £250,000
  • Sold by a developer who is participating in the scheme.

Which lenders participate in the MI New Home Scheme?

At the time of writing, Bank of Scotland, Nationwide and RBS are offering mortgages under the MI New Home Scheme.

How are lenders protected by the MI New Home Scheme?

The reason that lenders are prepared to lend up to 95% of the property value under this scheme is because the property developers put a proportion of the sale price into an ‘indemnity fund’. This acts as security for the lender if you default on the mortgage within the first seven years, and the property has to be sold for less than the original purchase price. The lender can then make up their losses from the indemnity fund. If the indemnity fund is not enough, then the Scottish Government can provide additional funds up to a limit. Although the lenders are protected from loss, you the buyer are not protected, and as with any mortgage, if you do not keep up payments you may lose your home.

Can I let the house out or rent out a room?

The scheme is not designed for those who want to let the property or rent out rooms. If, after completion, you find your circumstances have changed, and you need to let the house temporarily, or rent out a room for financial reasons, you can apply to the Scottish Government and your lender, however this will be decided on a case by case basis and you should not rely on consent being given.

Can I part-exchange my existing home to pay for the new home?

Two of the participating lenders (Nationwide and Bank of Scotland) will provide mortgages on part-exchanged properties. It also depends on whether the developer provides part-exchange as an incentive on the development you’re interested in.

How long will the MI New Home Scheme be available for?

The MI New Home Scheme is expected to carry on until 31 March 2015.

For expert advice on the right mortgage for you, call our mortgage advisers on 0141 471 4545 or fill out the form below.

Get your Mortgage Quote

Talk to an expert

Brought to you by Peter Dean


Peter Dean has helped thousands of people with quality money advice, through his well-known company Your Debt Expert. Peter is now helping even more people by offering quality whole-of-market mortgage advice.

Learn more

Peter Dean