First Home Fund Reopening for Applications
Good news for first-time buyers! It has just recently been announced that The First Home Fund will reopen for applications on the 1st of April for purchases completing from this date up until 31st March 2022.
When the scheme ran in 2020, it became fully subscribed well before the deadline and closed for new applications at the start of October. Our advice would be not to leave it too late if you are relying on these funds to secure your purchase.
Haven’t heard of the First Home Fund? Read our guide below to see if it could help you onto the property ladder.
What is the First Home Fund?
Originally launched in December 2019, the ‘First Home Fund’ is the latest Scottish Government scheme designed to assist first-time buyers. Upon successful application, first-time buyers can receive a loan of up to £25,000 towards their property purchase. There are several key benefits to the First Home Fund which set it apart from existing schemes including:
- No limit on the value of the property you can purchase
- Ability to offer above market value on a property
- Suitable for both new build and existing properties
- Ability to use your Help to Buy ISA or Lifetime ISA in conjunction with the fund
- Joint applications are allowed - as long as one of you is a first-time buyer
- No interest charges on the government loan
How does the scheme work?
The scheme is equity-based, meaning that the government will own a part of the property in proportion to what they have lent you. Unlike traditional loans, there are no monthly repayments to worry about and the money that is borrowed will not be subject to interest charges. The government contribution is restricted to £25,000 or 49% of the property value, whichever is lower, however, you can choose to take a smaller amount if you wish.
Do I qualify?
To qualify for the scheme, you must be a first-time buyer. The scheme is not means-tested so your income will not affect your ability to apply, however, you must have a minimum deposit of 5% and be using a mortgage for your purchase - so cash buyers cannot apply. The mortgage that you take out must be for at least 25% of the purchase price and the property must be used as your sole residence.
Joint applications are allowed but if one of you already owns a property this must be sold before using the scheme.
How do I apply?
To apply for the scheme you must first make a successful offer on a property. Be sure to have a mortgage agreed in principle to ensure that you have the necessary funds for your purchase. Once your offer has been accepted you can then make your application to the fund online. More information on the fund and application procedure is available here.
When purchasing a home it is vital to enlist the services of a competent solicitor who will liaise on your behalf with both the property seller and the administrator from the first home fund.
If you are a first-time buyer and would like more information, we offer a free, no-obligation appointment with our conveyancing team who can help walk you through the often complicated business of buying your first property. Contact conveyancing@dm-property.com to book an appointment.