The Essentials of the First Home Scheme
The First Home Scheme is a scheme introduced by the government of Ireland to support home ownership. The purpose of the scheme is to make it easier for first time buyers to buy new homes.
It is a shared equity scheme, where the government and participating lenders pay up to thirty percent of the cost of your new home in return for a stake in the home.
You can buy back the stake at any time, but you don’t have to.
How to qualify for the scheme
If you are considering using this scheme then there are certain key points which you should be aware of:
- The scheme is available to first time buyers AND “fresh start applicants”.
- The property being bought must be a new-build and can’t be a second hand or self-built house.
- The property must fall within certain price limits for particular areas of the country;
- It applies to both new build apartment and houses.
- Your mortgage must be with a participating lender.
- If you borrow more than what is permitted by the Central Bank (i.e. get an exemption to the limits), then you won’t qualify for the scheme.
- You must have a deposit of at least 10% of the property’s purchase price.
How much funding can you get?
You can get up to 30% of the market value of your new property with the First Home Scheme. This is reduced to 20% if you are also getting the help to buy scheme. The minimum amount you can get is 2.5% of the property purchase price, or €10,000, whichever is higher.
Are there any costs of using the Scheme?
There is no charge for the first home scheme for the first 5 years that you own your home. But, if you have not bought out the scheme’s equity share in your home by the sixth year, a service charge will apply. The service charge amounts increase the longer you stay in the scheme. The percentages are as follows:
- 75% for years 6 to 15
- 15% for years 16 to 29
- 85% for years 30 and over
It can be paid in monthly instalments or annually in one lump sum.
Buying back the Scheme’s Equity
You can buy back the full equity share in one payment, or buy it back partially as you can afford to.
The minimum amount you can pay back is 5% of the original equity amount and you can only make two partial payments a year.
There are a number of steps you must follow to buy back the equity from the scheme:
- Get your home valued;
- The valuation must be done by a valuer approved by the scheme. You must pay for the valuation;
- Once the valuation is carried out, it is sent to the scheme and as part of this, you should request them to send you the redemption amount. This will tell you how much is outstanding;
- You will then be asked to provide the following:
- proof of ID (valid for at least the next six months)
- proof of address (valid for at least the last six months)
- documentation to support your source of funds. This could be any/all of the following:
- bank statements for 12 months to support savings
- a letter from your parent or third-party if you are receiving a gift
- a letter from your solicitor if you have recently received an inheritance
- a Contract for Sale if you are in the process of selling your property
- proof of sale of an unencumbered asset
- any other details that we may require as proof of funds
We have acted on behalf of a number of clients in this area and the following is what is typically included in the First Home Scheme pack that is provided to your solicitor:
- Home scheme agreement (in duplicate);
- Solicitors undertaking – we undertake to the lender and the first home scheme body to register the mortgage and the inhibition (this prevents the owner from doing anything with the property without the consent of the first home scheme body);
- Solicitors fund requisitions form – this is the form we issue seeking the loan monies;
- An inhibition registration form;
- Statutory declaration of the customer declaring eligibility to the scheme
- Customer consent to the registration of the inhibition; and
- Certificate of title
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WHY CHOOSE ROE SOLICITORS?
We have extensive experience in dealing with all matters relating to conveyancing and buying and selling properties. For specific legal advice on buying a property from a receiver or insolvency practitioner, then please get in touch today.
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