The Scottish Government has relaunched the First Homes Fund, offering new support to help first-time buyers overcome deposit barriers and buy a home.
The fund reopened on June 24 as a joint stock plan. It provides eligible buyers with a government contribution of up to £10,000 towards the purchase price of the property. In return, the government takes an ownership interest in the home, which is repaid when the property is sold.
The scheme is available to first-time buyers purchasing a primary residence in Scotland. It can be used to buy a home worth up to £300,000.
Under the eligibility criteria, only one applicant in the joint application must be a First time buyer. Buyers are required to make a minimum personal deposit of 5% of the entire purchase price of the property. The mortgage must be repayment-based and can be used for both new and existing homes.
Where the agreed purchase price is higher than the property valuation, buyers must provide a 5% deposit based on the valuation amount. They must also cover the difference between the appraisal and the purchase price.
Although the scheme includes a government equity contribution, buyers will own 100% of the property. Mortgage lending and product selection will continue to be based on the full purchase price of the property.
Applicants must choose a mortgage product from the affordable housing pool and apply under the Shared Equity Scheme category.
The stock loan is interest-free for the entire term and does not require any ongoing stock loan payments. The buyer’s equity interest must be expressed as a percentage of a whole number, which means the loan amount may need to be rounded up or down. Any increase resulting from rounding may not exceed the maximum contribution available under the system.
About the Author
