For many first time buyers, saving a deposit is one of the biggest challenges on the path to home ownership. That’s why the Scottish Government’s announcement of the relaunch of the First Home Fund will be welcome news for aspiring first time buyers across Scotland.
The First Home Fund is designed to help eligible first time buyers get onto the property ladder by providing an interest free equity loan of up to £10,000 towards the deposit on their first home. Applications for the initial phase of the scheme are expected to open by the end of June – we eagerly await the announcement from the Scottish Government!
Whether you’re looking to purchase an existing property or a new build home, the scheme could provide valuable support at a time when affordability remains a key concern for many buyers.
What is the First Home Fund?
The First Home Fund is a Scottish Government initiative aimed at helping first-time buyers purchase a home by contributing towards their deposit. Eligible applicants can receive an interest free loan of up to £10,000 when purchasing a property worth £300,000 or less.
The scheme will be available to anyone who has never owned a property before, either in the UK or elsewhere in the world, and who is purchasing their home with a mortgage.
The funding can be used towards both existing properties and new build homes, provided the purchase price does not exceed £300,000.
How does the First Home Fund work?
Unlike a traditional loan, the First Home Fund does not require monthly repayments and no interest is charged.
Instead, the Scottish Government takes an equity stake in the property. When the property is sold, the government receives a percentage of the sale price equivalent to the percentage it originally contributed towards the purchase.
For example, if the government contributes £10,000 towards the purchase of a £200,000 property, it owns a 5% equity share. If the property is later sold for £250,000, the government would receive £12,500, representing 5% of the sale price.
This approach helps reduce the upfront financial burden on first time buyers while allowing them to access home ownership sooner.
Why is the return of the First Home Fund important?
At Neilsons, we welcome the return of the First Home Fund, which is expected to support thousands of households during the current parliamentary term.
The scheme addresses one of the most significant barriers facing first time buyers: raising a deposit. By reducing the amount buyers need to save themselves, the fund has the potential to make homeownership more accessible and encourage greater activity across the Scottish property market.
The return of the fund is also positive for buyers considering new build homes.
Many first time buyers are attracted to new build properties because they are energy efficient, require less maintenance and often come with developer incentives. By helping buyers bridge the deposit gap, the First Home Fund could open more opportunities within Scotland’s growing new build market.
Supporting first time buyers benefits the wider housing market as well. As the entry point to the property ladder, first time buyers play a crucial role in keeping property chains moving. Increased demand from this group can help existing homeowners move on to their next property, whether they are rightsizing, relocating or finding a home that better suits their needs.
Greater market activity also provides confidence for developers to invest in new housing projects, helping to increase housing supply and support jobs across the construction sector and wider economy. A healthy property market creates opportunities for buyers and sellers alike, contributing to stronger and more resilient local communities.
Frequently Asked Questions about the First Home Fund
Who is eligible for the First Home Fund in Scotland?
The scheme is available to first time buyers who have never owned a property anywhere in the world and who are purchasing a home with a mortgage.
How much can I get through the First Home Fund?
Eligible applicants can receive an interest free equity loan of up to £10,000 towards the purchase of their first home.
Can I use the First Home Fund to buy a new build home?
Yes. The scheme can be used to purchase both new build and existing homes, provided the property value does not exceed £300,000.
What is the maximum property value allowed under the scheme?
Properties purchased using the First Home Fund must have a purchase price of £300,000 or less.
Do I have to make monthly repayments?
No. There are no monthly repayments and no interest charges on the First Home Fund. The Scottish Government recovers its contribution when the property is sold. You will have to make monthly repayments on your mortgage however.
How does the government’s equity share work?
The government takes a percentage stake in the property equivalent to its contribution. When the property is sold, it receives the same percentage of the sale price.
Can I apply if I have owned a property before?
No. The scheme is intended for first time buyers only and is not available to existing or previous homeowners.
When will applications for the First Home Fund open?
The Scottish Government has announced that the first round of applications is expected to open by the end of June.
Will the First Home Fund run out?
Previous versions of the scheme were extremely popular and funding was allocated quickly. Prospective buyers should prepare early to avoid missing out.
Get ready before applications open
Previous versions of the First Home Fund proved extremely popular, with available funding often allocated within a short period of time. If you’re considering buying your first home, it is worth preparing now so you’re ready to act when applications open.
At Neilsons Solicitors and Estate Agents, our experienced legal team can guide you through every stage of the buying process, whether you’re purchasing a traditional resale property or a brand new home from a developer. From discussing tactics and tips, submitting your Offer to completing the legal work involved in your purchase, we’re here to help.
If you’re a first time buyer interested in taking advantage of the First Home Fund, get in touch with our team today. We’d be delighted to help you take the first step towards owning your first home.
Book a free consultation with Neilsons here!
