Bank of Ireland joins the First Home Scheme with €70m commitment.
The new €400m First Home Scheme from the Irish Government and backed by Irish banks aims to make it easier for first-time buyers to afford a new build home.
Launched today (7 July 2022), the First Home Scheme aims to bridge the affordability gap by providing buyers with part of the purchase price for their home in return for the scheme taking a minority equity share.
“Our participation in the First Home Scheme as a founding member reflects our ongoing commitment to help first time buyers get their first step on the property ladder”
The maximum stake that the scheme will take is 20% if the buyer is also availing of the Government’s separate Help to Buy scheme. This increases to 30% if the Help to Buy scheme is not used.
The scheme is available initially to first-time buyers and other qualifying homebuyers, including people affected by a relationship breakdown or insolvency, who are taking out mortgages from Irish banks.
Participating banks include Bank of Ireland, AIB and Permanent TSB.
How the First Home Scheme works
The scheme is making €400m available, to facilitate the purchase of up to 8,000 homes over a five-year period, subject to demand.
When someone who has bought a home using the scheme subsequently decides to sell it, he or she will be required to use the sale proceeds to redeem the outstanding mortgage and pay to the scheme the portion of the sale proceeds that corresponds to the scheme’s equity stake.
For example, if someone received 20% of the purchase price when they bought the home, he or she will have to pay the scheme 20% of the proceeds when they sell the home.
Scheme users will have the option, but not the obligation, to buy out some or all of the First Home Scheme equity stake at any time, if they wish and have the resources to do so.
No payments are due to the First Home Scheme if the equity stake is bought out in the first five years of ownership.
From year six onwards, scheme participants will be liable for a service charge.
A fresh start
“This scheme we are launching today will support first-time buyers and those seeking a fresh start by helping to bridge the gap between what they can afford and the price of the home they wish to purchase,” said Darragh O’Brien, Minister for Housing, Local Government and Heritage.
As a founding partner, Bank of Ireland said it is investing €70m into the First Home Scheme.
“Bank of Ireland strongly supports the ambition of many of our customers to own their own home,” explained Alan Hartley, director of Home Buying, Retail Ireland at Bank of Ireland.
“Our participation in the First Home Scheme as a founding member reflects our ongoing commitment to help first time buyers get their first step on the property ladder.
“We are also delighted to be a part of a scheme which supports the delivery of energy efficient homes and a societal move towards a low carbon future.”