If you used a Scottish Government scheme like the First Home Fund or another shared equity arrangement to help with your mortgage when buying in Scotland, you will almost certainly need to deal with that support when you sell or remortgage your property. This article is worth reading if you are thinking about selling, a bit unsure what “repayment of the government’s share” really means in pounds and pence, and want a plain‑English guide before you speak to a solicitor or a house‑buying company such as Sell My House Fast in Scotland.
How does the First Home Fund actually work?
The First Home Fund is a shared equity style scheme where the Scottish Government takes a stake (or share) in your property instead of giving you a traditional loan that you repay monthly. You still own the home and are on the title, but the government holds an interest that has to be settled later, usually when you sell or sometimes when you remortgage.
In practice, this means the government helped you with part of your original purchase price and, in return, it is entitled to the same percentage of the sale price or current value when you pay back its share. The home fund is a shared arrangement – the fund is a shared equity style contribution, not a grant you can just forget about, and many first-time buyers only realise this fully when they start thinking about selling their home or moving on.
Is First Home Fund a grant, a loan or something in between?
A lot of people call First Home Fund “a grant” because there are no monthly payments and no interest in the usual sense. Technically, though, it works more like a long‑term loan linked to equity, where the government holds a share in the property and expects that share back when you sell the property or buy back its stake.
So you do not repay a fixed sum that stays the same over time – what you pay back is based on the percentage the government contributed at purchase, multiplied by the value of the property at the time you settle. That’s why a proper property valuation or valuation to determine the value of your home becomes so important when you decide to sell or buy back more equity.
Do I have to repay the Scottish Government when I sell?
In most cases, yes – if you used the First Home Fund or another shared equity scheme, you must settle the Scottish Government’s share from the proceeds of the sale. The government’s stake is usually repaid out of the sale pricebefore you see what is left for yourself, your lender and any other costs.
This often comes as a surprise, especially where the property price has gone up, and the value of the property is much higher than the original purchase price. If you are unsure how that would look for you, speaking to a friendly home‑buying company like Sell My House Fast in Scotland or taking early guidance from a solicitor can really help you plan your next move before you list the property for sale or agree a quick cash deal.
How is the repayment worked out in real money terms?
The key thing is the percentage the Scottish Government contributed when you first completed your purchase. If the government put in 20% of the original purchase price, you normally have to pay back 20% of the value of the propertyat the point of selling or when you buy back their stake.
That figure is payable whether the market has gone up or down, and it is worked out using a valuation to determinewhat your home is reasonably worth at that time, not just what you personally think it might fetch. This equity sharecalculation is why some owners talk to financial advisers or a mortgage broker before they apply for a new mortgageor commit to selling their home, just to check that the numbers and any refund after settlement will leave them enough to buy a house again.
What happens if my property value has gone up – or down?
If the market has been kind and your property’s value has grown, the share you return to the Scottish Government will also be higher, because it is always based on the percentage you agreed at the start, not the original pounds figure. In many cases, owners are still ahead overall because they kept their own share of all the growth in equity, but it can feel a bit uncomfortable when you see the numbers for the first time.
If prices in your area have fallen, you might repay less in absolute terms than the government originally contributed, again because the calculation follows the current value of the property. This is one reason some people decide to sell the property sooner rather than later, and others hold on – the right timing really depends on your own circumstances, and firms like Sell My House Fast in Scotland can talk through your options in the context of a quick, certain cash sale if that is what you need.
Can I stay in my home and buy out the government’s share?
You do not have to wait until you move out to settle the government’s stake – in many cases, you can buy back more equity while you stay in your current residence. With some schemes, you can increase your share in blocks (for example, a minimum of 5% at a time) until you own 100%, and at that point, there is no more repayment due if you later decide to sell.
Doing this usually involves a new mortgage or extra savings, a fresh property valuation, and proper conveyancingwork by a solicitor to update the legal position and any standard securities. The application process can feel daunting for most people; a bit of early guidance from their lender, broker or even a company like Sell My House Fast in Scotland could help make the decision clearer, especially if you are weighing up whether to buy your first home outright in time or move on and use a quick sale.
What if I used Help to Buy or another shared equity scheme?
If you bought a new build or existing home using Help to Buy or the Open Market Shared Equity schemes in Scotland, the overall idea is very similar: you own the home, but the Scottish Government holds an equity share. When you sell the property or increase your stake, you must repay the same percentage of the current value that the government put in at the start, under the shared equity scheme rules.
Details can vary from scheme to scheme – for example, the exact criterion on when you can apply to staircase your equity, whether consent is needed for certain changes, and the limits on housing types or locations. It is usually worth checking the official pages, such as mygov.scot, and then speaking with a solicitor or a quick‑sale specialist like Sell My House Fast in Scotland to see how those rules play out for your particular property and any planned purchase of your next place.
What do lenders and solicitors look for when you sell?
When you are buying a property with these schemes, your mortgage must meet certain lending criteria – for example, a mortgage of at least 25 per cent of the property price, must be on a capital and interest basis, and you need a deposit of a minimum of 5 per cent from your own funds. When it comes to selling, your lender and your solicitor will both want to be satisfied that the government’s stake will be cleared correctly on settlement, along with the main mortgage and any other secured debts.
Behind the scenes, your conveyancing solicitor will deal with the formal procedure, including any notices to the scheme administrator, final payment calculations, and distribution of the proceeds. For many sellers, this is where a straightforward cash buyer like Sell My House Fast in Scotland feels attractive, because once the price is agreed, you have a clear figure to work with and a committed buyer who can move at the pace you need.
How does all this affect my next purchase?
Because the First Home Fund and similar schemes take a slice of your sale price, the amount you walk away with will directly affect what you can put down as a deposit on your next purchase. For some first-time buyers moving on from their starter home, that can mean rethinking the budget slightly, or looking at slightly different housing areas or property types.
This is where calm, practical advice is worth its weight in gold – speaking to financial advisers, a broker, or even the team at Sell My House Fast in Scotland as an initial sounding board can give you a realistic sense of what you can do next. A genuine client conversation about your goals, rather than a hard sell, usually makes it easier to decide whether to stay put and increase your share, or to sell the property and buy a house that better suits the next stage of life.
Could a quick cash buyer help if I’m tied into a scheme?
If you feel boxed in by your current scheme, a cash buyer can sometimes provide the breathing space you need. A company like Sell My House Fast in Scotland will look at the value of your home, the likely sale price, and factor in the Scottish Government’s share so you can see, early on, what you may have left after everything is paid and all repayment obligations are met.
For many people juggling work, family and money worries, that kind of clear‑headed guidance is as important as the actual cash offer, especially if you wish to buy again quite quickly after the sale. It is not the right route for everyone, but if you need a certain settlement date and minimal hassle, speaking to Sell My House Fast in Scotland for some no‑pressure financial help discussion can at least show whether a quick sale could help you move on more smoothly.
When should I get proper advice – and from whom?
Ideally, you should talk to a solicitor and, if needed, your lender or adviser before you put your property on the market, especially if you are in any kind of First Home Fund or shared equity arrangement. That way, you understand any criterion you still have to meet, what consent is needed, and how the numbers might look once the government’s stake and your existing mortgage have all been cleared on settlement.
At the same time, there is no harm in having an informal chat with a home‑buying company such as Sell My House Fast in Scotland early on, just to compare how a private sale through an agent stacks up against a direct cash offer. For many people, simply knowing there is an option that can move faster and handle a lot of the legwork around conveyancing and timing makes the whole process of selling your home under a government‑backed scheme feel a lot less intimidating.
Key points to remember
- First Home Fund and similar schemes are shared equity, not free grants, and the Scottish Government keeps a share.
- You normally repay the same percentage of the sale price that the government contributed at original purchase.
- The amount due is worked out from a proper property valuation, not guesswork.
- A solicitor handles the legal procedure, but you should understand the basics before you commit to selling.
- What you walk away with will affect the deposit for your next purchase, so early guidance from advisers or a company like Sell My House Fast in Scotland could help you plan.