For many aspiring homeowners, saving a deposit remains one of the biggest barriers to getting onto the property ladder.  The Scottish Government hopes to address that challenge through the newly launched First Homes Fund, a scheme designed to provide financial support to people buying their first home.

The scheme offers eligible first-time buyers a contribution of up to £10,000 towards the purchase of a property worth up to £300,000.  It is expected to help 2,000 households during its initial phase.

What is the First Homes Fund?

The First Homes Fund is a shared equity scheme created by the Scottish Government to help first-time buyers secure a home sooner by reducing the amount of deposit they need to save themselves.

Unlike a conventional loan:

• There are no monthly repayments to the Scottish Government.
• No interest is charged.
• The Scottish Government takes an equity share in the property based on the amount contributed.
• The equity share is generally repaid when the property is sold.

The scheme can be used for both new-build properties and existing homes and is available throughout Scotland.

Who Qualifies?

To be eligible, applicants must:

• Be a first-time buyer (link to relevant part of first time buyer guide).
• Have never owned a property before, either in Scotland, elsewhere in the UK, or anywhere else in the world.
• Be purchasing a property in Scotland as their home.
• Be buying with a mortgage.
• Be purchasing a property with a value of £300,000 or less.

The fund is designed to support a broad range of first-time buyers and is not restricted solely to new-build developments.  Existing homes also qualify, provided the eligibility criteria are met.

How Does Shared Equity Work?

One of the most common questions buyers ask is what "shared equity" actually means.

Importantly, shared equity is not the same as shared ownership.

With the First Homes Fund:

• You purchase and own the property.
• Your name appears on the title deeds.
• You are responsible for the mortgage and ongoing property costs.
• The Scottish Government provides financial assistance for the purchase and in return obtains a percentage equity stake in the property.

For example:

If you purchase a property for £100,000 and receive the maximum £10,000 contribution, the Scottish Government's equity share would represent 10% of the property's purchase price.

If you later sell the property for £120,000, the Scottish Government would receive 10% of the sale price (£12,000). Likewise, if the property's value fell, the repayment would reflect the reduced value.

How is Ownership Handled?

Although the Scottish Government holds an equity stake, homeowners retain ownership and control of the property.

• The homeowner owns and has title to the property.
• The Scottish Government does not charge rent on its share.
• There are no monthly repayments linked to the Government's contribution.
• The Government's equity share is usually repaid when the property is sold.

This structure allows buyers to benefit from assistance today while still enjoying the rights and responsibilities that come with home ownership.

What Role Does a Solicitor Play?

As with any property purchase in Scotland, having a solicitor is essential.

Your solicitor will:

• Review and explain the terms of the First Homes Fund.
• Handle the conveyancing process.
• Ensure the Scottish Government's equity interest is properly recorded.
• Liaise with your mortgage lender and the scheme administrator.
• Conclude missives and complete the legal transfer of ownership.
• Deal with LBTT return and register the lender’s security deed.

Because shared equity arrangements involve additional legal documentation, obtaining advice from a solicitor at an early stage is particularly important.

What Does This Mean for First-Time Buyers?

With affordability continuing to challenge many households, the return of the First Homes Fund is welcome news. By helping buyers bridge the deposit gap, the scheme could make home ownership possible sooner for thousands of people across Scotland.

If you've been struggling to save a large deposit but are otherwise ready to buy, this funding could provide the extra support needed to take that first step onto the property ladder.

Thinking of buying your first home? Speak to a solicitor and mortgage adviser as early as possible to understand your options and ensure you're ready to take advantage of the scheme. Or why not look at our  First Time Buyers Guide to help you understand more what is included in buying a home.