The First Home Fund is a shared equity scheme that was launched by the Scottish Government in 2019 and is aimed to help First Time Buyers in Scotland get their foot on the property ladder.
It was closed to new applicants in late 2020, due to increasing demand, however it will be reopening the scheme from 1st April 2021 for new applications.
How does it work?
The First Home Fund works as a Shared Equity Scheme.
When you purchase your property using the First Home Fund, the Scottish Government will loan you an Equity amount towards the value of your property – up to £25,000.
You will still own the property outright and the Scottish Government will only have a claim to the amount they have invested; it will still be your name(s) on the property title deeds. You also won’t make any additional payments to the Scottish Government, or have to pay interest on their investment either.
Once it comes to selling your property in the future, you will repay the Scottish Government their percentage of Equity Share. You can also repay this earlier if you want to increase your own Equity Share before then.
Do I still need to pay a deposit?
Yes, the First Home Fund does not replace the need for a deposit. You will still need at least a 5% deposit (subject to individual lender requirements) on the value of the property you are purchasing.
Who is it for?
The First Home Fund is intended for use by first time buyers in Scotland, who will be taking out a mortgage in the purchase of their first property..
A first time buyer is defined as someone who does not, or never has, owned a property in the UK or abroad.
Your mortgage must be at least 25% of the purchase price of the property.
The First Home Fund is not available to cash buyers.
It is only available for those buying a property they intend to live in – it is not available for Buy-to-Let investments.
And there can only be one application First Home Fund applicant per property. This can be a joint application if you are buying with a partner, however you cannot use two individual applications for the First Home Fund in one property purchase.
Is it only available for new properties?
No. You can take advantage of the First Home Fund on new builds or existing properties, opening up the market and areas available to first time buyers in a way that the previous Help To Buy scheme did not, as it was only available on new build properties.
Can it be used with other offers/schemes available to First Time Buyers?
The First Home Fund cannot be used in conjunction with any other Scottish Government Shared Equity Schemes.
You can however continue to use a Help to Buy ISA or Lifetime ISA towards your deposit when taking advantage of the First Home Fund.
It is always worth seeking advice from an Independent Mortgage Advisor, both in regards to the mortgage of your property purchase and to find out if the First Home Fund is available to you, and a good fit for your individual circumstances.
How do I apply?
Applications for the First Home Fund will reopen on 1st April 2021.
You will first need to appoint a solicitor to help you in the purchase of your property.
As well as acting for you and completing the usual steps in the purchase of a property, they will work with the Administrating Agent of the First Home Fund scheme.
Once you reach the stage of an offer on a property being accepted, you will complete your application through Link Housing. If your application is approved an Award Letter from the Administrating Agent will be sent to you, your Independent Mortgage Advisor (if you have one) and your solicitor.
When the Award Letter has been received, the process of a full mortgage offer can be started. The Award Letter is valid for 3 months and the missives on your property must be completed within this time, or another application will have to be started.
It is also worth knowing that a fee of £550 will be charged and collected by the Administering Agent once they receive your application.
If you are a First Time Buyer hoping to take advantage of the First Home Fund, and in need of a solicitor to represent you in the purchase of your first property, get in touch today on 0131 554 6244 or email: email@example.com