The First Home Fund; help for Scottish Home buyers explained

First Home Funds - what do I need to know?

The Scottish Government introduced a new Help to Buy Scheme, known as the First Home Funds Scheme, in December 2019. The Scheme can be used when purchasing both new build, and existing properties.

First Home Funds Scheme

You’d be forgiven for thinking it may not have been as popular as envisaged given the global pandemic that hit just after its launch. However, the popularity of the Scheme was mammoth. Perhaps not a surprise given just how busy the housing market was in the second half of 2020. The Scheme helped thousands of First Time Buyers get onto the property market last year.



So how does the Scheme work? Generally speaking, you enter into an agreement with the Scottish Government whereby they agree to grant a sum of money (up to £25,000) to help you purchase your first home. The grant is in exchange for a share of the equity in the Property. So, if you were buying a Property valued at £100,000 and you were receiving a £10,000 grant, the Scottish Ministers would be entitled to 10% share in the equity. Although, it is important to highlight that you would still have 100% ownership.

In order to protect their interest, a legal document called a “Standard Security” is registered against the Property in favour of the Scottish Ministers. That means if you go on to sell the Property, the Security will need to be “discharged” i.e removed. In order for it to be removed, the sum must be repaid to the Scottish Government. Determining what that sum is depends on their share in the equity. If we take the example above where you bought for £100,000, if you go on to sell, say 5 years later, and the value of the Property is now £110,000 then their 10% share in the equity will be £11,000. That’s the figure that would need to be repaid. It is worth considering this when deciding whether you want to use the scheme.


It is also worth highlighting that the conveyancing process will also change if you are using the Scheme. The Scheme provider (Link Housing) have really strict timescales that we need to comply with when sending our request to them for funds. They require a strict 4 weeks notice.

However, we can’t request funds from them until (1) your Mortgage Offer has been issued; and (2) we are in receipt of all paperwork from them. You can expect to add, on average, an additional 3-4 weeks to the conveyancing process when using the Scheme.


There is no doubt that the Scheme has its benefits, but it does also have some drawbacks. Determining whether or not you want to use the Scheme to assist in your first house purchase will depend on the Scheme’s availability, but also on your own circumstances. If you would like any further information on this, please get in contact with our New Business Team (newbusiness@mcvey-murricane.com) who would be delighted to direct you accordingly.

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