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Exploring The First Home Scheme For First-Time Buyers In Ireland
The First Home Scheme for first-time buyers has been active in Ireland since 2022 and is still going strong almost four years later.
The initiative, launched to alleviate financial pressure on first-time buyers, has assisted in the construction or purchase of almost 5,000 homes to date.
In this article, we delve into everything you need to know about the First Home Scheme so you can assess your eligibility and weigh up its many advantages.
What is the First Home Scheme for first-time buyers?
The First Home Scheme is a government-backed, shared equity incentive that is designed to help bridge the financial gap many buyers face when purchasing a home.
Aimed at first-time buyers and ‘fresh start’ applicants, the scheme provides meaningful support by covering the shortfall between a buyer’s savings and the total cost of a property. It does so by providing up to 30% of a property’s purchase price in exchange for an equivalent equity stake, which is owned by the government and participating banks until it is eventually paid back by the homeowner.
This approach offers a practical pathway to homeownership for those who may be struggling to save adequate funds, particularly with residential property prices rising by 6.8% in the last 12 months.
Am I eligible to apply?
To avail of the First Home Scheme, you must first ensure you meet all eligibility criteria:
- You must be aged 18 or over.
- The property in question must be a newly built home or a self-build.
- The cost of the property must fall under the price ceiling stipulated by your local authority.
- You must be a first-time buyer, a fresh-start applicant (following a divorce or bankruptcy), or lined up to purchase the home you are currently renting.
- You must have mortgage approval from a participating lender.
If you’ve put a tick after each of these items, you could be the perfect candidate to apply for the FHS.
How do I apply for the First Home Scheme?
Applying for the FHS is a straightforward process, but it’s vital to be well-organised.
In advance of preparing your application, you’ll need to compile the following paperwork and information:
- Your letter of mortgage approval (AIP) from a participating lender.
- Evidence of financial stability.
- Details about your desired property.
- Proof of identity and Irish residency.
- Solicitor’s details.
Gathering this documentation can be time-consuming, so getting started at the earliest point will promote a smoother experience.
What are the main advantages of the First Home Scheme for first-time buyers?
In the midst of a cost-of-living crisis, the First Home Scheme can be hugely advantageous to prospective homeowners.
Firstly, a successful applicant could receive equity support of up to 30%, a substantial level of financial assistance that can significantly reduce the size of your mortgage. As a result, monthly repayments will also become more manageable.
Secondly, the savings you make at this point in the mortgage process can be put towards covering some of the other hidden costs of buying a home, such as stamp duty, valuation costs and solicitor’s fees.
Additionally, while the FHS can serve as a lifeline for first-time buyers desperately seeking a home to call their own, it also presents a viable pathway towards second-time homeownership for individuals re-entering the housing market, following a potentially stressful period in their lives.
Lastly, those availing of the FHS can also benefit from other government-led incentives, such as Help to Buy, which also helps first-time buyers find their footing on the property ladder.
Pros vs cons: Considering the drawbacks of the First Home Scheme for first-time buyers
Although the benefits of the FHS are appealing, it’s also essential for first-time buyers to examine the pitfalls of this incentive.
Given its status as a shared equity scheme, a buyer will not initially own their property outright; they will share ownership with the government, which retains an equity stake. While participants can buy back this share at any point, the cost of repurchasing the equity is tied to the current market value of the home, rather than its original price. Therefore, homeowners may end up paying significantly more than the initial value of the equity they received.
Another consideration is the introduction of service charges after the initial five years. These charges are added to your repayments from year six and will be charged until all equity has been cleared. It’s also important to note that they increase over time:
- Years 6–15: 1.75% annually
- Years 16–29: 2.15% annually
- Year 30 onwards: 2.85% annually
If the government’s share of the property is not paid back at the earliest stage, these charges can add considerable expense to your existing mortgage repayments.
Navigating the First Home Scheme with the help of an expert financial advisor
With so much to consider, from eligibility criteria to eventual repayments, navigating the First Home Scheme alone can be a daunting experience.
This is why many first-time buyers secure the services of an experienced mortgage advisor to provide expert insight and guidance every step of the way.
Explore the benefits of the First Home Scheme for first-time buyers with our help
At Symmetry Financial, we help first-time buyers navigate the mortgage journey with clarity and confidence. This includes breaking down government supports like the First Home Scheme, so you fully understand how they work and whether they’re right for you.
Our experienced, straight-talking team provides practical, expert advice at every stage, ensuring you have a clear picture of the costs and commitments involved with buying your first home.
If you’re ready to take the next step, we’re here to help. Get in touch today to find out how we can support you on your path to homeownership.
If you’d like a free, no-obligation consultation for your mortgage, pension or financial needs, get in touch here, call us on 01 6831673 or email us directly on info@symmetryfinancial.ie.
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