Launched in July 2022, the First Home Scheme (FHS) is an innovative affordable housing initiative aimed at helping first-time buyers purchase their homes. This scheme offers a shared equity model, allowing eligible buyers to access financial support that makes homeownership more attainable.
How Does the First Home Scheme Work?
The First Home Scheme enables participating banks and mortgage lenders to contribute up to 30% of the total property value. This contribution acts as an equity stake in the home, helping buyers secure the necessary funding while reducing the amount they need to borrow.
Understanding Equity Share
Under the FHS, the equity share model allows mortgage providers to invest in the property. For instance, if the FHS provides 15% of the equity required, they will hold a 15% stake in the property until it is sold or until the buyer decides to repay the equity. It’s important to note that the equity interest is a percentage of the property value, meaning it will fluctuate with market changes.
Repayment Options
Buyers can repay the equity share either as a lump sum or through affordable installments. Additionally, if the equity is repaid before the sixth year, no service charge will apply. However, after five years, service charges based on a percentage of the equity share will be implemented:
- Years 6–15: 1.75%
- Years 15–30: 2.15%
- 30+ Years: 2.85%
These rates provide flexibility, allowing for annual or monthly payments, and even options to pause or defer payments if needed.
Who Qualifies for the First Home Scheme?
The First Home Scheme primarily targets:
- First-time Buyers: Individuals looking to purchase a new home who may need assistance with financing.
- ‘Fresh Start’ Applicants: Those who have experienced divorce, separation, or insolvency and have no capital remaining in their previous home.
Eligibility Criteria
To be eligible for the FHS, applicants must:
- Be aged 18 or over.
- Have the right to reside in Ireland.
- Not have previously purchased or built a property to live in.
How Much Funding Can You Receive?
The First Home Scheme provides substantial support to buyers. For the first five years, the equity share is interest-free. If you choose not to buy out the FHS equity stake after this period, the aforementioned service charges will apply.
| 6 – 15 Year | 1.75% |
| 15 – 30 Years | 2.15% |
| 30+ Years | 2.85% |
These rates are fixed.
Example of Funding
For instance, if you wish to buy a property valued at €450,000, and the FHS provides €45,000 (10% of the purchase price), the FHS will maintain a 10% ownership share. As property values change, so does the amount owed.
Important Situations to Consider
Certain situations may trigger the need to repay the equity share in full:
- Selling or Renting: If you decide to sell or rent out your home, the equity share must be repaid along with any outstanding service charges.
- Change of Mortgage Provider: Switching to a non-approved lender will require full repayment of the equity stake.
- Passing: In the unfortunate event of your death, the FHS equity must also be settled.
How to Apply for the First Home Scheme
Applying for the FHS is a straightforward process:
- Check Eligibility: Use the FHS eligibility calculator on their website.
- Get Mortgage Approval: Secure approval from an FHS-approved lender.
- Complete the Online Application: Provide personal details, proof of mortgage approval, and identification.
- Application Review: The FHS will assess your application and documentation.
- Receive Eligibility Certificate: If approved, you’ll get a certificate outlining potential equity amounts.
- Finalize Purchase: After completing the necessary steps, your solicitor will handle the transfer of funds and the purchase of your home.
Conclusion
The First Home Scheme is a significant step towards making homeownership accessible for many in Ireland. By providing crucial financial support and flexible repayment options, it offers a viable pathway for first-time buyers and those seeking a fresh start. If you’re considering applying or have questions about the process, visit the First Home Scheme website for more details.
For personalized advice on navigating the property market, contact Farrelly & Southern Estate Agents. Our experienced team is dedicated to helping you find your dream home!
