First Home Fund – what is it?
In May 2019, The Scottish Government have announced the First Home Fund; a £150m shared equity scheme which helps first-time buyers to buy a new build or existing build with funding support from the Government. The aim is to help more first-time buyers get onto the property ladder.
Here at Watermans’ Shawn Wood shares what you need to know and how you can find out more. Shawn says that the new fund offers “A great incentive to enable first time buyers on the property ladder, particularly in places like Edinburgh where rising house prices are making it increasingly difficult for those just starting out.”
I’m saving for my first home; how much can I apply for?
The Scottish Government-led scheme offers up to £25,000 to assist those who are saving for the deposit for their first home. As the buyer, you’ll be required to provide a minimum deposit of around 5% and your mortgage must be at least 25% of the purchase price.
When can I apply?
Applications opened on 18th December 2019 which means you can apply now. The scheme is expected to run until March 2021 and is expected to help up to 6,000 first-time buyers.
There is an administration charge of £550 which is payable on application to the Scottish Government. The fee will be refunded if your application is unsuccessful.
Can I apply if I’ve owned a property previously?
Unfortunately, not. If you’ve previously owned a property anywhere in the world, then you cannot apply and, anyone participating in the fund must be investing in their main property of residence.
If it’s a joint purchase and only one party is a first-time buyer, then this is OK if the other person does not own a property at the time of purchase.
What makes the First Home Fund different from the Help to Buy scheme?
The fund helps buyers to purchase re-sale properties as well as new builds which differs from the Help to Buy Scheme, which only applies to new builds. Help to Buy also has an upper limit of properties of £200k whereas there is not an upper limit for this new fund.
What will happen to the Government’s share in the future?
The government will own a share of your property. The loan will only be required to be repaid on sale. If the 25k is the equivalent of 20 per cent of the purchase price, then the government will receive 20 per cent of the final sale price as repayment. The buyer also has the option to “buy out” the government’s share before the sale.
How can Watermans help?
While you have to apply for the First Home Fund through Link Housing, its recommended that you speak to an advisor in advance of doing so. Our trusted team have completed several purchases using the First Home Fund Scheme so can help you to navigate the process from start to finish.