What is the First Home Fund?
The First Home Fund is run by the Scottish Government and aims to help first-time home buyers purchase a property. Up to £25,000 is available to all first-time buyers towards the purchase of both new build and existing properties.
A first-time buyer is anyone who does not own, or has previously owned, a property in Scotland or anywhere else in the world. In order to take part in the scheme, you will be required to provide a minimum deposit of 5% (subject to individual lender requirements, but any amount over valuation must be cash funded) and your mortgage must be at least 25% of the purchase price. Although the Scottish Government will have an equity share in the property, you will own the property outright. There are no monthly payments to be made towards the Scottish Government and no interest will be charged.
Please note that lenders will have their own individual requirements when providing a mortgage. Our Expert Mortgage Adviser, will discuss this in more detail with you.
You will normally repay the Scottish Government’s percentage equity share when you sell your home, however you can choose to pay this off earlier.
What is Shared Equity?
Buying through a shared equity scheme means you split the cost of purchasing the property with the Scottish Government. You will fund your share through a deposit and a mortgage, with the remaining share being provided by the Scottish Government. There are no monthly payments or interest payments to the Scottish Government for their contribution. Instead, you will normally pay it back when you sell your property, or you can choose to increase your equity share over time.
As an example, if your deposit and mortgage pays for 85% of your home’s value when you buy, the Scottish Government will hold a 15% share. This means that
when you sell, you will receive 85% of the final sale price and the Scottish Government will receive 15%. This does not mean that the Scottish Government has an ownership right to the
property. You will own the property outright and hold the full title.
Who is it for?
The scheme is open to all first-time buyers in Scotland who are taking out a mortgage. You will not be able to apply to the scheme if you are a cash buyer or if you have previously owned a property in the UK or abroad at any time (as either a sole or a joint owner).
While the scheme is open to all first-time buyers there are a few requirements that you will need to be aware of:
• The maximum contribution from the Scottish Government is £25,000 or up to 49% of the property valuation figure or the purchase price (whichever is lower). If you purchase a property for less than the valuation figure then the maximum Scottish Government contribution is £25,000 or 49% of the purchase price.
• There is a limit of one application per property. You can submit a joint application however you will be limited to one award of £25,000.
• Your mortgage must be at least 25% of the purchase price.
• Your mortgage must be capital repayment.
• The property must be the sole residence of all applicants. The scheme is not available for buy-to-let properties.
• You cannot apply to other Scottish Government shared equity schemes (e.g. Help to Buy (Scotland) Affordable New Build, Help to Buy (Scotland) Smaller Developer, New Supply Shared Equity or Open Market Shared Equity) while also applying to this scheme. If you have an open application to any other shared equity scheme in Scotland you must withdraw this before you apply to
this scheme. However you are able to use a Help to Buy: ISA or Lifetime ISA to go towards your deposit.
• There is no restriction on builder incentives but part exchange is not allowed, although assisted purchase is permitted.
We would recommend that you consult with our Expert Mortgage Advisers before applying to the scheme. There are a range of shared equity schemes available to applicants in Scotland and an we will help you choose the most appropriate one for your situation.
Contact us today on 0141 370 0480 to discuss the options available, or email us at email@example.com