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The First Home Fund

The First Home Fund is available across Scotland and provides a government-backed equity loan of up to £25,000 to first-time buyers towards their new home. To take part in the scheme you need a minimum deposit of 5% deposit and an agreed repayment mortgage of at least 25% of your home’s purchase price. The scheme is capped at £150 million, once the funding has been allocated the scheme will close – so act now.

What is Help to Buy?

What is the First Home Fund?

The First Home Fund is backed by the Scottish Government and is available to all first-time buyers towards a new-build, or existing property. Designed to help people move on to the property ladder, the scheme provides a payment of £25,000 (or a maximum of 49% of the valuation/purchase price) to eligible buyers towards the cost of a home. There is no upper limit to the cost of the property you can buy, but applications should be made to the scheme by March 2021.

How does it work?

Applications to the fund must be made through an administering agent and if successful, will be subject to a fee. Successful applicants will receive an award letter and missives should be concluded within three months of the date of this letter. Settlement should take place within six months of missives being concluded.

Successful applicants will own the property outright and no monthly payments, or interest are due to the government, however the loan must be repaid when the property is sold (or you can increase your share of the equity while you live in the property).

In essence, this means if you receive a 10% equity loan from the Scottish Government then when you sell your home you will repay 10% of the sale price, which may be higher, or lower, than the purchase price.

Applicants to the First Home Fund will not be able to apply to other home ownership schemes in Scotland: Help to Buy (Scotland), New Supply Shared Equity and Open Market Shared Equity. An independent financial adviser will be able to advise whether or not this scheme is suitable for you, or whether one of the other shared equity schemes operating in Scotland is more appropriate.

You own 100%
of your home
First Home Fund diagram
Who’s eligible?

Who is eligible?

The First Home Fund is open to first-time buyers in Scotland. To be eligible for the scheme, you should have a 5% deposit towards your new home and an agreed repayment mortgage. You, or the person you are purchasing the property with, must be a first-time buyer and the property must be your sole residence.

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Ready to apply?

For information about appointing an independent financial advisor (IFA), visit: https://www.fca.org.uk/consumers/finding-adviser

Top FAQs about
First Home Fund

Are there any restrictions under the First Home Fund?
A.

The scheme is open to first-time buyers and you must live in the property you buy (it must be your sole residence).

You cannot apply to the fund if you have an application in progress to Help to Buy (Scotland) Affordable New Build, Help to Buy (Scotland) Smaller Developer, New Supply Shared Equity or Open Market Shared Equity schemes. If you have applied to any of these schemes then you must withdraw your application before applying to the fund.

Your mortgage must be a repayment mortgage and you must pay at least 5% deposit.

If you wish to remortgage you must first obtain the agreement of the Scottish Government.

Can I buy any property under the First Home Fund?
A.

The fund is open to both new-build and existing homes and there is no price limit on the cost of the property you purchase.

Is there a limit to how much I can borrow under the First Home Fund?
A.

You can borrow up to £25,000, (or up to 49% of the valuation figure, or the purchase price, whichever is lower).

Will the Scottish Government own part of my home?
A.

You own 100% of your home, the government does not hold any legal title to your property.

Is the equity loan interest-free?
A.

Yes the loan is interest-free.

When do I have to repay the loan?
A.

You would ordinarily pay back the equity loan when you sell the property. You can pay back the loan while you are still living in the property by increasing your share of the equity by at least 5% in each instance. If however your existing equity share is 90%, or above, you can only increase your equity share to 100%. You will have to pay the costs incurred by increasing your share of the equity.

Will I repay the same amount of money I borrow under the fund?
A.

The loan is an equity loan, which means that if your home has increased in value when you sell it then the amount you repay to the Scottish Government will also increase. Equally, if your property has decreased in value then the amount you repay to the government will be less than the initial amount borrowed. It is the percentage of the equity loan that is important, so if you borrowed 10% of the valuation price of your property when you bought it, you will repay 10% of the valuation price when you sell it.

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*Subject to individual lender requirements. Available until March 2021. Terms and conditions apply. For more information, visit https://linkhousing.org.uk/firsthomefund.