What is the First Home Scheme?
The First Home Scheme (FHS), also known as the Shared Equity Scheme, was launched as part of the “Housing for all Strategy” announced by the Irish Government in September 2021. The scheme has been developed as the result of a partnership between the State and three of the retail banks in Ireland: Permanent TSB, Bank of Ireland and AIB.
The aim of the scheme is to bridge the funding gap between the deposit and mortgage of eligible first-time buyers (FTBs), and the price of their new home (within price ceilings established across the country). Homes eligible for the scheme will be subject to area-based price ceilings for houses and apartments, based on open-market prices.
Who can benefit?
The scheme is available to FTBs seeking to purchase a newly built private dwelling home in a private development, anywhere in the country along with self-build applications.
As well as eligible FTBs, there will be a limited number of exceptions for non-FTBs, in accordance with the ‘Fresh Start’ principle announced in ‘Housing for All’. An example of this could be if there was a relationship breakdown or insolvency, where any of the persons making the application previously purchased or built a private dwelling home which they no longer hold an interest in.
A buyer can claim up to 20% equity support to purchase a home (or up to 30% if ‘Help to Buy’ is not utilised).
The support provided will take the form of a percentage equity share in the home, equal to the funding gap between the maximum mortgage available to the buyer and the cost of a new home. The buyer will be permitted to redeem or ‘buy out’ this equity stake at any time, but they will not be required to do so unless a trigger event occurs (property sale, bereavement, switch to residential investment etc.)
Buyers cannot exceed 4 times loan to income on their mortgage in order to benefit from the scheme.
There will not be an interest rate applied to The First Home Equity Share, however there will be a service charge that comes into effect after year 5, as per below rates:
|0 - 5||0%|
|6 - 15||1.75%|
|16 - 29||2.15%|
As this is a ‘Shared Equity’ scheme, future property price changes can affect a buyer’s equity share. As the equity facility is linked to the market value of the buyer’s home, any changes in prices will affect any partial or final redemption amount.
So, if property prices increase, the percentage equity the buyer has to redeem will remain the same, but the actual amount will increase.
Likewise, if property prices decrease, the percentage equity that the buyer has to redeem will remain the same, but the amount will decrease.
Source: Gov Ireland
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