Buyers Guide to the First Home Fund

The First Home Fund scheme is a shared equity scheme which has been receiving considerable coverage in the press over recent weeks.
We have quickly become specialists in assisting clients with the First Home Fund and getting that all important first step on to the property market and will explain in more detail here how the scheme works.

What is the First Home Fund?
The First Home Fund allows first time buyers to purchase their new home with assistance from the Scottish Government. The scheme has recently reopened for applications and will remain open until the current funding has been exhausted.

Do I still need a deposit?
Yes, you will require to put down a minimum 5% deposit of the purchase price. You must also take out a minimum mortgage amount of £25,000, which needs to be a capital and interest repayment mortgage. The scheme is not available to cash buyers, or for buy-to-let properties where the property will not be the sole residence of applicants to the scheme.

The following lenders provide mortgages to applicants who are using the First Home Fund scheme:

  • Bank of Scotland
  • Barclays Bank
  • Glasgow Credit Union
  • Halifax plc
  • Leeds Building Society
  • Nationwide Building Society
  • Scottish Building Society
  • Scotwest Credit Union
  • TSB Bank

How much could I receive from the Government?
You will be entitled to a maximum amount from the scheme of £25,000. This will be capped at 49% of the property valuation or purchase price, whichever is lower. If you buy a home above home report value, which is commonplace in the Scottish property market, the assistance figure from the First Home Fund is based on the actual value of the property, not the price paid if you are paying more than market value.

First time Buyer
If you are buying a property with someone else, you can still apply for the First Home Fund even if your joint buyer has owned property before.

Can a Help to Buy ISA be used together with the Scheme?
Yes, the help to buy bonus can still be claimed.

When do I pay the Government back?
The First Home Fund is a shared equity scheme whereby the Scottish Government will provide assistance in return for an equity stake in your property. You will own the property 100%, but the Government will have an equity stake in the property which will be in the form of charge over your property. No sums are paid each month like you do with your mortgage payment. The shared equity stake is repaid when you sell your property in the future.

How do I apply for the scheme?
You must have an offer accepted (even verbally) or have reserved a new build home with a builder in order to apply. We recommend you speak to an independent financial adviser or mortgage advisor before applying for the scheme.
You can find out more about the First Home Fund in the Scottish Government guidance leaflet.  The Scottish Government also provide a helpful flow-chart of the application process.

Peace of Mind
As well as conveyancing, Nellany & Co offers a full range of legal services to clients across Scotland including wills and trusts, and family law to provide a one-stop shop, where you can manage your entire property buying or selling process, and also deal with any legal issues you might have, for complete peace of mind. Contact us today using our online form, or give us a call on 01294 464 175.