Buying your first home is an important milestone. It can also feel like a complicated process, particularly when you are trying to understand deposits, mortgages, legal costs and the support that may be available to help you get onto the property ladder.
The Scottish Government’s First Homes Fund is now open for applications, offering eligible first-time buyers the opportunity to apply for up to £10,000 towards the purchase of their first home.
For many people, this could provide valuable support. However, the scheme is a shared equity arrangement, so it is important to understand how it works, what your responsibilities are, and whether it is the right option for your circumstances before you proceed.
What is the First Homes Fund?
The First Homes Fund is a Scottish Government shared equity scheme for first-time buyers.
Through the scheme, eligible buyers can apply for up to £10,000 to help them buy their first home. The contribution can be used towards the purchase of a property valued at up to £300,000.
The funding comes from the Scottish Government. In return, the Scottish Government will hold an equity share in the property. This means that, while you will own the property and have title to it, the Scottish Government will also have a financial interest in your home.
For example, if you buy a property for £100,000 and receive £10,000 from the First Homes Fund, the Scottish Government would hold a 10% equity share in the property.
What does shared equity mean?
Shared equity can be helpful, but it is important to understand that the funding is not simply a grant or a discount.
There are no monthly payments to be made to the Scottish Government and no interest will be charged. However, the Scottish Government’s equity share will usually be repaid when the property is sold, or when another payment event is triggered under the terms of the shared equity agreement.
This means that if the value of your home increases, the amount repayable may also increase because it is based on the Scottish Government’s percentage share in the property, rather than only the original sum received.
What will buyers still be responsible for?
Even if you receive support through the First Homes Fund, you will remain responsible for the ongoing costs of owning and maintaining your home.
These may include:
- your mortgage
- buildings insurance
- contents insurance
- repairs and maintenance
- Council Tax
- heating, lighting and water bills
- fixtures, fittings and furniture
You will also need to make sure that your mortgage lender is willing to proceed on the basis of the First Homes Fund arrangement. According to the Scottish Government, a number of lenders have signed up to the scheme, with more expected to follow.
Why first-time buyers should take care
The First Homes Fund may be a useful route onto the property ladder, but it is not necessarily straightforward.
Before relying on the scheme, buyers should consider:
- whether they meet the eligibility criteria
- whether the property they want to buy meets the scheme requirements
- whether their mortgage lender will accept the shared equity arrangement
- how the Scottish Government’s equity share will affect them in the future
- what happens when they sell the property
- what costs they will remain responsible for
- how the scheme may affect the timescales for completing the purchase
Taking legal advice early can help you understand your obligations and avoid unnecessary delays once you have found a property.
We have properties available under £300,000
At Drummond Miller, we understand how important it is for first-time buyers to feel informed and supported throughout the buying process.
We currently have properties available under £300,000, which may be of interest to those looking to use the First Homes Fund, depending on eligibility, lender approval and the specific requirements of the scheme. To see what is currently available, you can browse our properties for sale under £300,000.
Our conveyancing team can guide you through the legal stages of buying your first home, explain the process clearly, and help you understand what the First Homes Fund may mean for you. We also provide dedicated conveyancing support for first-time buyers, helping you move forward with confidence at each stage of the process.
Speak to our conveyancing team
Every home-buying journey is different. Whether you are just starting to look, arranging a mortgage, or have already found a property, our team can help you understand the steps involved.
To speak to Drummond Miller Property about buying your first home, contact our team on 0131 226 5151