Mortgages in Scotland:
A 2025 Consumer Guide

If you’re buying, remortgaging or investing in Scotland, a few Scotland-specific rules (LBTT, the Home Report, and “missives”) sit alongside UK-wide drivers like the Bank of England’s Bank Rate and swap markets. Below is a quick guide to what matters now, with practical insights for homebuyers and investors.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Scottish Mortgage Overview

• Bank Rate sits at 4.00%. The Bank of England maintained this at its September 2025 meeting, keeping tracker rates steady and setting the tone for fixed-rate pricing.

• Scottish property prices: The average Scottish house price is around £194,000, up roughly 4% year-on-year.

• Borrowing trends: UK Finance data shows first-time buyers in Scotland typically borrow at an average loan-to-value (LTV) of 83% and loan-to-income (LTI) of about 3.0.

Key numbers

• Bank of England Bank Rate: 4.00%

• Scotland average house price: £194,000

• First-time buyer new loans (Q2 2025): 8,940

• LBTT bands unchanged (0% up to £145k, 2%–12% thereafter)

• First-time buyer relief: Nil-rate band up to £175,000

• Additional Dwelling Supplement (ADS): 8%

As at 27 October 2025, London.

What’s different about mortgages in Scotland

Land and Buildings Transaction Tax (LBTT)
Scotland uses LBTT instead of stamp duty. The main bands start at 0% up to £145,000 and rise gradually to 12% for values above £750,000. First-time buyers enjoy relief up to £175,000.

Additional Dwelling Supplement (ADS)
If you’re buying a second home or a buy-to-let, there’s an 8% surcharge on top of LBTT. This applies from December 2024 onwards.

Home Report
Every seller in Scotland must provide a Home Report, which includes a property valuation, energy performance certificate and questionnaire. It helps both buyers and lenders assess condition and affordability.

Missives
A purchase becomes legally binding when solicitors conclude the missives — the exchanged letters that form the contract. It’s important to have your mortgage offer and valuation ready before this stage.

Rates, swaps and affordability (plain-English explainer)

• Variable or tracker rates move broadly with the Bank of England’s rate.

• Fixed-rate deals depend on money-market “swap” rates, which indicate where the market expects future interest rates to go.

• As of late 2025, stable Bank Rate expectations and lower inflation have helped lenders reduce fixed rates compared with 2023.

The right deal depends on your deposit, credit profile and how comfortable you are with rate changes.

What this could mean for you

First-time buyers in Scotland

• Consider your deposit size and how it affects your available rates.

• Account for LBTT, Home Report fees and legal costs early in your budgeting.

• Useful help: see first-time buyer mortgages and our step-by-step mortgage guide.

Remortgagers

• If your fixed deal ends soon, start comparing new options six to nine months in advance.

• Explore whether fixing again could help stabilise payments.

• See remortgaging guidance and how to secure great rates.

Buy-to-let or second homes

• Remember ADS applies at 8%.

• Lenders may stress-test your rental income to ensure affordability.

• See our buy-to-let guide and limited company buy-to-let.

Moving home

• Time your mortgage offer and valuation with the missives schedule to avoid delays.

• See moving home guidance or our quick mortgage guide.

How Mortgage One can help

If you’d like to understand what today’s moves could mean for you, speak to a qualified mortgage adviser at Mortgage One. We can explain your options and timings based on your circumstances, including Scottish-specific costs like LBTT, ADS and Home Reports.

The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. For tailored advice specific to your circumstances, please contact Mortgage One directly.

FAQs

1. Are mortgage rates in Scotland different from the rest of the UK?
   Not necessarily — most lenders price UK-wide, but Scottish purchases involve LBTT and Home Reports, which affect overall costs and timing.

2. What is the Additional Dwelling Supplement (ADS) in Scotland?
   It’s an extra 8% tax on additional properties such as buy-to-lets or second homes, payable alongside LBTT.

3. Do I need a Home Report to get a mortgage?
   Yes. Sellers must provide one, and lenders often refer to it when considering valuations.

4. When does a Scottish house purchase become legally binding?
   When solicitors conclude the missives — the letters forming the purchase contract.

5. What’s the current Bank Rate and why does it matter?
   It’s 4.0% (as of September 2025). It affects tracker mortgages directly and fixed rates indirectly through swap markets.