First time buyers offered 10k....what's the catch?

[JacknDiane]

Sounds too good to be true?
What do you all think?

could you give a bit more context @JacknDiane?

10k over ask? Assuming you are in Scotland as posted in Scorsnet. They’ve had their fingers burnt too many times so going in over ask?

I've not read the full detail but it's a kind of shared equity scheme. I'm inclined to think that offering it for a deposit would be better.

I also think they'd be better just stuffing the money into straightforward bricks and mortar. The housing situation needs more than what's basically a bit of fiddling about.

Sorry its on bbc Scotland news, its a new thing from the SNP

That's it. Im just not sure what a shared equity scheme is? Dc wants to get on the property ladder but is dubious about this?

https://www.gov.scot/news/first-homes-fund-open-by-end-of-june/

The Scottish government will take a share in the property up to the value of 10k.

So, if you are a first time buyer, who has never owned property before in Scotland or anywhere else, you can apply for the shared equity scheme and request up to 10k towards the purchase price.

The government then owns a percentage of the house.

So if you bought for 100k and the government contributed 10k, it would own 10% of the property.

If you sold the property for 120k the government would take it's 10% share (12k)

There is no rent payable on the borrowed 10k but also no contribution to repairs and maintenance.

You can sell on the open market, so not restricted to selling to scheme members.

On the face of it, it seems like a helpful scheme. It just depends if 10k is enough to make it onto the property ladder.

Looks to be better than English 1st homes scheme (one of my DC works in Durham and has a 1st Homes house there) in that it doesn’t only apply to new builds and no restriction on who you sell on to. Although the English scheme gave more money and took more equity (30% of purchase price in my son’s case). Not sure how much £10k will help. I guess £40-50 per month less interest. Will be interesting to see how lenders view the shared equity. My son had some difficulty (despite a decent salary) but Halifax came thru (after being rejected by some Building Societies which had better rates).

Not read all the details but my DS and his partner bought last year they would definitely have benefited from the scheme if it’s what it appears to be. The 10k when combined with the money lent to them by me and other family members for the deposit would have meant a lower interest rate. So seems like a good idea to me as the sizeable deposit required is often the stumbling block to purchasing a house. There are no rental properties anywhere and although I accept that in some areas it won’t be enough in many it will and hopefully this will enable young people in particular to consider buying.

It sounds quite good then. Can the 10k go towards the deposit needed to get a mortgage in the first place?

No, my understanding is that the 10k is purchasing a share in the property, so presumably will be transferred on completion. You will have to check when the scheme is officially launched in June.

You still need a deposit but in effect you are knocking 10k off the purchase price, so can borrow less.

The SG page literally says it’s £10k towards the deposit needed for your first house purchase.

Oh yes, I beg your pardon it does. So they will contribute upfront. That's actually even more helpful. It sounds like a good scheme.

It is a good scheme for current first time buyers

Although I think in a big demand, short supply situation, like we do in housing in particular areas of Scotland, this is only going to compound this issues and drive up house prices further.

We need more supply, not more demand.