Scotland launches new housing scheme for first time buyers
The Scottish government has launched a brand new scheme in an attempt to help first time buyers who are struggling to get onto the property ladder.
Back in April 2019, the Scottish government announced they’d be launching a £150 million pilot scheme to help first time buyers, and it’s now here!
What is First Home Fund?
First Home Fund is the name of the new housing scheme in Scotland where first time buyers have the chance of getting up to £25,000 towards the purchase of their first home - this can be either a new build house or an existing property.
How does it work?
The cost of buying your house will be split three ways: you, the Scottish government and a mortgage.
You’ll need to pay a minimum deposit of 5% of the house price, and the Scottish government will contribute a maximum of 49% of the property price, and the rest will be covered by taking out a mortgage from a bank or building society.
Despite the government having a share in your home, you will own your house outright yourself and won’t have to make any monthly repayments to the Scottish government, nor will you be charged any interest.
Before you apply
Like the sound of it so far? Before you go ahead with your application, have a read of the requirements below to make sure you fit the bill.
- The scheme is only applicable for people who have never owned a house in Scotland, or anywhere else in the world, previously.
- Maximum contribution from the Scottish government is £25,000 (or 49% of the house price or valuation - whichever is lower).
- The fund can be used on any priced property. There is no minimum or maximum.
- You’re limited to one application per property, so if you’re joint-buying a house with someone, you can only have one application and one fund of £25,000.
- Your mortgage must be a repayment mortgage and not interest-only.
- Your mortgage must be at least 25% of the house price.
- The scheme is not available for buy-to-let properties.
- There is an admin fee of £550 to the Scottish government, but this is refunded if the application is unsuccessful.
Can the scheme be used in conjunction with other current schemes?
If you’d like to use the First Home Fund then you can’t apply for other Scottish government schemes such as Help to Buy (Scotland) Affordable New Build, Help to Buy (Scotland) Smaller Developer, New Supply Shared Equity or Open Market Shared Equity.
If you already have an application for any of these schemes, please withdraw this before you apply for the First Home Fund. However, you can use the Help to Buy ISA or the Lifetime ISA to help pay your deposit on the house.
Other information you may need to know
- If you’re a first time buyer paying for your house outright with cash, you won’t be able to use this scheme.
- There is no restriction of which area you have to buy your house. This is open to the whole of Scotland.
- You’ll have to pay back the equity stake to the Scottish government when you sell your home.
- The scheme is open until 31st March 2021.
For more information about the scheme, please feel free to get in touch with our friendly team of mortgage advisers who will be able to answer any questions you have.
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.