If you are considering buying a property and you are a first time buyer, there is a new shared equity scheme to help you get on the property ladder.
If you apply for the First Home Fund you could receive up to £25, 000 from the Scottish Government towards the purchase of your dream home.
If you are considering this scheme but your partner has previously owned a property, you can still apply!
What is the first home fund?
The First Home Fund was introduced by the Scottish Government on 18 December 2019.
This is a new branch of the Shared Equity Schemes already set up by the Scottish Government. This applies to both existing homes and new build homes. Although the Scottish Government will have shared equity in a property, the title to the property will be in the purchaser’s name only. This means the purchase will be the sole owner of the property and the Scottish Government will not take any title to the property whatsoever.
There is no limit on the price of the property that can be purchased when using First Home Fund.
What is a first time buyer?
This new scheme is available for all first time buyers. A first time buyer is defined as someone who has never owned a property anywhere in the world at any time.
The first time buyer criteria is met when one of the purchasers is a first time buyer so long as the other does not currently own any property.
How does the shared equity operate?
The maximum amount of equity that the Scottish government can have in the property is 49% of the purchase price or property valuation (whichever is lowest). However, the amount that they contribute is capped at £25,000. The valuation will be found in the valuation section of the Home Report or the lender’s mortgage valuation.
Other conditions that must be met:
- The mortgage amount must be at least 25% of the purchase price
- The purchaser must contribute at least 5% of the purchase price from their own funds
- Help to Buy ISAs and other ISAs can be used to funds this
- The property must be used by the purchaser as their only residence
- The property cannot be used for buy-to-let purposes
- Payment of the application fee of £550 (refunded if unsuccessful)
How do you apply for First Home Fund?
Firstly, if you are thinking of offering on a property and you would like to also apply for First Home Fund then you will need to get your mortgage agreed in principle. Some lenders do not offer mortgages that allow you to apply for First Home Fund so you should check with your lender first.
When you have your mortgage verbally agreed in principle you can make an offer on a property. As soon as your offer is accepted you can apply for First Home Fund.
You can apply here.
The application is not means tested and there is no limit on the purchase price. The application will be assessed based on the purchaser’s ability to continue repaying the mortgage and other criteria.
If your First Home Fund application is successful you will receive an Award Letter which will also be sent to your solicitor. After this is in place you can then proceed with your full mortgage application.
Contact our Residential Property Lawyers
If you would like to get in touch to discuss purchasing a property, contact our experienced residential property team for assistance.
