A new Government scheme to support First-Time Buyers has opened today.
First Home was set up to make it easier for First-Time Buyers to afford a new build home as part of the Government’s Housing for All strategy.
The €400 million Scheme aims to bridge an existing affordability gap by providing buyers with part of the purchase price for their home, in return for the Scheme taking a minority equity stake and will be open to buyers of newly-built houses and apartments in private developments.
The Scheme will take a maximum stake of 20 per cent if the buyer is also availing of the Government’s separate Help to Buy Scheme and 30 per cent if Help to Buy is not used.
Applications can be made online at www.firsthomescheme.ie and the process runs in parallel with the mortgage application process.
Initially, First Home will be available to First-Time Buyers and other qualifying homebuyers who are taking out mortgages from AIB (including its EBS and Haven Mortgages businesses), Bank of Ireland or Permanent TSB.
Other mortgage providers may join the Scheme in the coming months.
Minister for Housing, Local Government and Heritage Darragh O’Brien said: “This Scheme we are launching today will support First-Time Buyers and those seeking a fresh start by helping to bridge the gap between what they can afford and the price of the home they wish to purchase.
"It will make new homes more affordable and easier to access for First-Time Buyers, helping them get their foot on that crucial first rung of the property ladder. It will encourage the increased development of new build homes.
“This Government is working to give young and not so young people a real chance to buy their own home. Today’s announcement is another step in that direction.”
How the First Home Scheme works
The Scheme will provide financial support to borrowers and facilitate them in purchasing a new home that they could not otherwise do after combining their available mortgage and deposit.
It is making €400 million available to facilitate the purchase of up to 8,000 homes over a 5-year period, subject to demand.
To be eligible for the Scheme, an applicant must be a First-Time Buyer, who is defined as a person who:
- has not previously purchased or built a dwelling in Ireland for his/her/their occupation, and
- does not own or is not beneficially entitled to an estate, or has interest in any dwelling in Ireland or elsewhere and,
- has a right to reside in Ireland, and
- is aged over 18
A number of exemptions have been introduced, which mean applicants may also be eligible despite previously purchasing or building a property in Ireland if:
- they did so with a spouse, civil partner, or partner, and that relationship has ended. The applicant must not retain a beneficial interest in the previous property, or
- they have sold (or divested of) that property as part of a personal insolvency or bankruptcy arrangement, or other legal process as a consequence of insolvency
Applicants must also:
- have Mortgage Approval with a participating lender
- borrow the maximum mortgage amount available from one of the participating lenders (up to 3.5 times income)
- not be availing of a Macro Prudential Exception (MPE) with a participating lender
- have a minimum deposit of 10% of the property purchase price
Sale of houses bought using the First Home Scheme
When a First-Time Buyer, who has bought a home using the Scheme, subsequently decides to sell it, they will be required to use the sale proceeds to redeem the outstanding mortgage and pay to the Scheme the portion of the sale proceeds that corresponds to the Scheme’s equity stake.
Scheme users will have the option, but not the obligation, to buy out some or all of the First Home Scheme equity stake at any time if they wish and have the resources to do so.
A maximum of two partial buyouts are allowed per year. Partial or full buyouts are based on the market value of the property at the time the buyout takes place.
No other payments are due to the First Home Scheme if the equity stake is bought out in the first five years of ownership.
From year six onwards, Scheme participants will be liable for a service charge starting at 1.75 per cent of the euro value of the original equity provided by the First Home Scheme (i.e. simple interest of 1.75 per cent of the portion of the purchase price that was provided by First Home, not 1.75 per cent of the total purchase price).
This service charge will increase to 2.15 per cent from year 16 and to 2.85 per cent from year 30.
Homeowners will have the option of paying this charge each year or deferring the payment until the property is sold.
READ NEXT:
- 'Boys never fancied me at school - but they can't look away now'
- Wimbledon fans get eyeful after 'ridiculous' rule forced female stars to play braless
- Dad who left partner for Ukrainian refugee quits job to become carer as she's now partially blind
- Irish restaurant hits back at criticism as customer is charged €16 for porridge and coffee
- Love Island viewers reveal potential reasons for Jack Keating's absence once again
Get breaking news to your inbox by signing up to our newsletter .
