What is the shared equity scheme (first home scheme)?
This shared equity scheme opened for application on 7th July 2022 and is available throughout Ireland.
The main objective is to bridge the gap between a deposit and a mortgage for first time buyers and other eligible home buyers. With this shared equity scheme, the Department Of Housing, Local Government & Heritage and participating banks pay up to 30% of the cost of your new house and in return they get a stake (equity share) in your home. You have the option to buy back the stake at any time, but this is not compulsory.
HOW DOES PERCENTAGE OWNERSHIP WORK IN THE FIRST HOME SCHEME?
Eligible homebuyers receive funds from the scheme in return for an equity share in the ownership of their home.
For example:
Property purchase price = €300,000
Equity share provided by the first Home Scheme = €30,000 (10% of the property purchase price) The scheme will own a 10% equity share in your property, whether or not the value of the property increases or decreases over time.
If over time you decide to buy back the equity stake, you will own your property outright (100%).
WHO IS FUNDING THE FIRST HOME SCHEME(FHS) ?
The FHS is funded by the Government of Ireland through the Department of Housing, Local Government and Heritage and authorised mortgage lenders, who will provide equity to eligible applicants.
WHAT IS THE ROLE OF THE MORTGAGE LENDER IN THE SHARED EQUITY SCHEME?
A Participating Lender is an authorised mortgage lender who invests in the FHS ( first home scheme) and becomes a shareholder in the properties that they assist in funding.
To qualify for the Shared Equity Scheme, you are required take out a mortgage with a Participating Lender.
The current list of participating lenders are AIB, Haven, EBS, Bank of Ireland, and PTSB.
HOW WILL THE FHS HELP ME TO BUY A HOUSE?
The main aim of the FHS is to bridge the gap for first time buyers and other eligible homebuyers who are currently unable to buy a home due to insufficient funds when they combine their deposit and mortgage. Subject to eligibility criteria and terms & conditions, it can potentially provide up to 30% of the value of the property (or 20% in the case of the Help to Buy Scheme).
HOW LONG WILL THE SHARED EQUITY SCHEME BE AVAILABLE FOR?
At present it is expected that the FHS will be available until 2025. This duration may be revisited depending demand and the number of participating lenders.
WILL I QUALIFY FOR THE SHARED EQUITY SCHEME?
In order to qualify for the FHS you must:
be over 18 years of age
be a first time buyer or an eligible homebuyer
have received mortgage approval from a Participating Lender
borrow the maximum mortgage amount available to you from a Participating Lender (up to 3.5 times your income)
agree to a minimum equity share of 2.5% of the property purchase price, or €10,000, whichever is higher
You cannot avail of an exception from your Participating Lender (borrow more than 3.5 times your income)
have a minimum deposit of 10% of the property price if you are a first time buyer, or 20% if you are an eligible homebuyer
purchase a newly built house or apartment in a private development in the Republic of Ireland
The property you are buying must be used as your Principal Private Residence (PPR)
purchase a property within the property price ceilings based on local authority area
You may also qualify if you have previously purchased or built a property in the Republic of Ireland:
with a spouse, civil partner, or partner, and that relationship has ended. You must not retain a beneficial interest in the previous property, or
you have sold that property as part of a personal insolvency or bankruptcy arrangement, or other legal process as a consequence of insolvency
WILL MY INCOME BE MEANS TESTED FOR THE SHARED EQUITY SCHEME?
No, there is no upper or lower household income limit to be eligible for the scheme. Income is not a factor when assessing eligibility.
WHAT TYPE OF PROPERTY CAN I PURCHASE UNDER THE SHARED EQUITY SCHEME?
Under this scheme you can buy a newly built house or apartment in a private development within the Republic of Ireland. Second hand properties and self builds do not meet the criteria for the scheme.
I HAVE PREVIOUSLY INHERITED A HOUSE. WILL I BE ELIGIBLE FOR THE FHS?
No, The FHS funding is only eligible to homebuyers who have NOT inherited a property in or outside Ireland.
I HAVE ALREADY PURCHASED A PROPERTY IN ANOTHER COUNTRY, WOULD I STILL BE ELIGIBLE FOR THE FHS?
No, the shared equity scheme is only available for homebuyers who have not purchased a property in or outside of Ireland.
I AM CURRENTLY AVAILING OF THE “HELP TO BUY’SCHEME”, WILL I STILL BE ELIGIBLE FOR THE FHS?
The Help to Buy Scheme (HTB) enables eligible first-time buyers with the deposit required to purchase a new house or apartment for €500,000 or less. Eligibility for the HTB scheme is separate from the FHS. If you are availing of the Help To Buy Scheme, the maximum amount you may be eligible for from the Shared Equity Scheme will be 20% of the value of the property.
I WANT TO BUILD ON A SITE I GOT FROM MY PARENTS. WILL I QUALIFY FOR THE FHS?
No at present, self builds do not qualify for the Shared Equity Scheme.
IF I ALREADY HAVE APPROVAL IN PRINCIPAL, CAN I STILL PUT IN AN APPLICATION FOR THE FHS?
Yes. You should register on the FHS customer portal and then complete your application.
For further information on the Shared Equity Scheme, speak to one of our Financial Advisors today