The Scottish Government has announced a new scheme to help first-time buyers with a deposit for a new home. The “First Home Fund” will contribute up to £25,000 towards the cost of buying a property through a ‘shared equity scheme’.
Applications are being accepted now, with a total of £150 million expected to help around 6000 people until around March 2021.
The key elements of this new scheme are:
- The scheme will be open to all first-time buyers in Scotland. A first-time buyer is anyone who does not own, or has previously owned, a property in Scotland or anywhere else in the world
- Unlike the ‘Help to Buy Scheme’ the First Home Fund can be used to by either new-build or second hand properties
- Buyers will still need to have a deposit of around 5% of the purchase price
- There is no price cap on the property to be purchased
- Buyers will need to take out a mortgage for a minimum of 25% of the purchase price. The mortgage must be a capital and interest repayment mortgage
- This is a ‘shared equity scheme’. It 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.
- In a shared equity scheme, you will own the property and only have to pay the government’s investment back when you sell the property. There are no monthly payments and no interest charged on the government’s investment.
- You can choose to pay off the government’s equity share before the property is sold.
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 recive 85% of the final sale price and the Scottish Government will receive 15%.
If you would like further information on the ‘First Home Fund’, or any of the other shared equity schemes on offer, please click on the links in the article or use the ‘contact us’ section of our website if you would like to speak to a Wallace Quinn advisor if you are about to buy a property and looking to instruct a solicitor to act on your behalf.
As of December 2019, there are three other shared equity schemes being run by the Scottish Government which are not affected by the ‘First Home Fund’.
The First Home Fund cannot be used in conjunction with any of these schemes, however Help to Buy ISA or LISA funds can be used towards the deposit.
- Help to Buy (Scotland) which can provide up to 155 of the purchase price of a NEW BUILD property up to the value of £200,000. This fund is available to both first time buyers and existing property owners
- OMSE (Open Market Shared Equity) is aimed at people with low to medium incomes who could not otherwise afford to buy a home
- NSSE (New Supply Shared Equity Scheme) is to help people buy a new-build home from a council or housing association.
Both OMSE and NSSE are available through the Low Cost Initiative for First Time Buyers (Lift).
Note: Whilst we are always confident in the information contained in our web content, this is a developing story on a new government scheme, so you should not take any action or decisions based on this article without first speaking with one of our solicitors!