The Scottish Government has made £150million available to First Time buyers via a new national scheme called the ‘First Home Fund’ which launched on 19th December 2019 and will run until March 2021.
It is anticipated to assist 6,000 first time buyers and provides successful applicants with up to £25,000 towards the purchase of their first home.
The maximum contribution from the Scottish Government is £25,000 or 49% of the property valuation figure or the purchase price (whichever is lower). If you purchase a property for less than the valuation figure, then the maximum Scottish Government contribution is £25,000 or 49% of the purchase price.
In order to take part in the scheme, first time buyers will be required to provide a minimum deposit of 5% of the purchase price (subject to individual lender requirements) and the mortgage must be at least 25% of the purchase price. The mortgage must be capital repayment. Although the Scottish Government will have an equity share in the property, the first-time buyer(s) will own the property outright. There are no monthly payments to be made towards the Scottish Government and no interest will be charged.
There is no maximum property price (the fund can be used as a contribution to any value of property) subject to individual lender requirements and there is a maximum of one application per property. Buyers can submit a joint application however they will be limited to one award of £25,000.
The property must be the sole residence of all applicants and the scheme is not available for buy-to-let properties.
The first-time buyer will normally repay the Scottish Government’s percentage equity share when they sell their home, however they can choose to pay this off earlier.
Buyers cannot apply to other Scottish Government shared equity schemes (e.g. Help to Buy (Scotland) Affordable New Build, Help to Buy (Scotland) Smaller Developer, New Supply Shared Equity or Open Market Shared Equity) while also applying to this scheme. If you have an open application to any other shared equity scheme in Scotland this must be withdrawn before you apply to this scheme. However, buyers can use a Help to Buy ISA or Lifetime ISA as part of your deposit.
An administrative fee of £550 is payable directly to the administrator. However, this will be refunded if the application is unsuccessful.
Dave Marshall, Partner at Neilsons Solicitors and Estate Agents, said: “The First Home Fund is welcome news. This will give many first-time buyers a helping hand to get on the property ladder. In Scotland in 2019, first time buyers made up half of Scottish property transactions and paid an average of £19,952 for a deposit. In Edinburgh, the average purchase price for a first time buyer is £217,406. Often, getting a deposit together to purchase a property can be a strain for first time buyers, so this Fund will help relieve some of the difficulties that first time buyers face.”
Are you a first time buyer? Book your free consultation with Neilsons online here!