What financial supports are available for First Time Buyers?

The government has put in place a number of schemes to help hard pressed buyers get a foot on the housing ladder. These schemes can make a massive difference to your buying budget, but the number of schemes and how they interact with each other can also be confusing.

In this article we focus on the two schemes used by most first time buyers.

• The First Home Scheme (FHS)

• The Help to Buy Scheme (HTB)

By using both of these schemes you can fund up to 30% of your property, boosting what you can afford to borrow to buy and giving you a head start on other would be buyers.

1. How do the schemes work?

The First Home Scheme is an equity scheme, while the Help to Buy Scheme is a tax refund scheme.

The First Home Scheme allows first time buyers purchasing newly built homes to receive up to 30% of their property value as a deposit to help reduce the mortgage amount needed. In return the Irish Government retains a share of ownership of your home.

The government also has the right to payments on the amount advanced after 5 years, first at 1.75% then rising to 2.15% after 15 years and 2.85% after 29 years.

The Help to Buy scheme is a Government tax refund scheme.

The HTB scheme allows first time buyers to claim 10% of their property value to help them pay deposits on newly built homes.

2. How do I know if I qualify for the schemes?

The schemes are targeted at First Time Buyers who can’t get a large enough mortgage to afford to buy a new home.

For that reason the First Home Scheme and Help to Buy scheme both require you to have mortgage approval for at least 70% of the property's value to qualify.

In order to qualify for the First Home Scheme, you must-

• Be a first time buyer both in Ireland and outside of Ireland

• Be moving in with an applicant who is also a first time buyer if more than one person will be purchasing the home

• Be moving into a newly built home in a private development

• Buying under €500,000 in Dublin or Cork and down to €250,000 in some parts of the country.

In order to qualify for the HTB scheme, you must-

• Be a first time buyer in Ireland and outside of Ireland

• Be moving in with an applicant who is also a first time buyer if more than one person will be purchasing the home

• Be moving into a newly built or self built home

• Be moving into a home worth less than €500,000

3. How much is available to me from the schemes?

Under the First Home Scheme, first time buyers can claim,

• Up to 30% of the purchase price of their new home, for example a home worth €200,000 can claim €60,000

• If you avail of the Help to Buy Scheme however the First Home Scheme is capped at 20%

As the Help to Buy Scheme is a grant it is not subject to being reclaimed or to future interest payments.

This means that a combination of funding the purchase through a 10% Help to Buy Scheme grant and a 20% First Home Scheme equity option is the best approach for most cases.

Under the Help to Buy scheme, first time buyers can claim,

• 10% of the purchase price of their new build, for example a home worth €200,000 can claim €20,000.

Or for self-build homes,

• 10% completion value of their self-build home.

The most you can claim from the HTB scheme is €30,000. Neither scheme is available for buy to let properties.

4. How can I apply to the schemes?

If you think you qualify for the First Home Scheme, then you should talk to a mortgage broker who can advise you on the best approach and which lenders work with the scheme.

The government have also launched a web site dedicated to the scheme. [1]

If you think you qualify for the help to buy scheme Ireland, then you should go to Revenues MyAccount service, where you will be told how much tax refund is available to you as well as apply.

5. In a Nutshell

These schemes are the closest thing you will get to free money and by not using them you are likely to be at a disadvantage compared to other buyers.

There are some catches to bear in mind though, the only lenders in the scheme currently are PTSB, Bank of Ireland, EBS, Haven and AIB. These lenders have the most expensive mortgages on the market. The scheme isn’t available for other lenders who may have the best mortgage rates including Credit Union mortgages, Avant Money, Finance Ireland and ICS.

If you wanted to switch mortgage in future to a cheaper lender, you would have to buy out your equity stake to do so. This could severely limit your options and leave you paying through the nose on your interest repayments.

Next Steps

There are in depth articles about the two schemes First Home Scheme and Help to Buy Scheme, plus a handy article on how you might also be able to release equity from your parents home to also fund your deposit on the Irish money guide and mortgage broker moneysherpa.ie.