First Time Buyers

Introduction

The Department of Infrastructure can provide financial assistance to eligible First Time Buyers via two Shared Equity Schemes which replaced the House Purchase Assistance Scheme 2012 in July 2014.

The information provided below is for guidance purposes only and is not intended to offer a definitive interpretation of the Shared Equity Purchase Assistance (First Home Choice) Scheme 2014 and Shared Equity Purchase Assistance (First Home Fixed) Scheme 2014.

The Schemes provide two distinct pathways for assistance:   

‘First Home Fixed’ – this Scheme applies to new "approved" first time buyer and buy-back properties, which are on developments undertaken by the Department or private developers, that are allocated directly by the Department to applicants who are on the Register of First Time Buyers (see relevant Section below).  The number of properties available for allocation through this route in any year is limited. Eligibility criteria for the ‘First Home Fixed’ Scheme focus on those on lower incomes who are most in need of assistance.

‘First Home Choice’ – this Scheme applies to properties purchased on the open market, and allows higher levels of income and purchase prices to enable greater flexibility in purchasing properties on the Open Market. 

Access to the Schemes is subject to residency qualification of 5 years, and the applicant must be a current resident at time of application. Applicants must not have owned a property before, on Island or anywhere else. 

Applicants are required to provide a minimum deposit of 5% of the purchase price, as a condition of the Department providing assistance. 

The assistance provided under both the Schemes is in the form of an equity loan, to a maximum of 30% of the purchase price, with which the Department purchases an equity share of the property. The applicant must fund as much of the property as possible with the equity loan ‘topping up’ any difference between the purchase price and the mortgage, deposit, and any other funds available to the applicant.

The equity loan is held as a charge against the property for the lifetime of the applicant’s ownership. The loan is interest free for the first 2 years after which interest becomes payable every year at an initial rate of 1%, increasing each subsequent year by 1% to a maximum equivalent to Bank of England Base Rate plus 5% (whichever is the lowest).

Subject to certain terms and conditions the applicant can buy out the Department’s equity share in whole or in part.

The purchase of a home is a major decision and is likely to require your largest ever financial commitment. Buying a property involves not just monthly mortgage and interest repayments, but also rates, insurance, repairs and maintenance. Before considering home ownership you should seek advice from your mortgage provider or independent financial advisor.

The Schemes are funded by an annual budget. As such, if demand is high, it may be necessary to close the Scheme to new Open Market applications from time to time, subject to budget availability.

First Home Fixed 

In order to be considered for an ‘approved’ property under the First Home Fixed Scheme you will need to apply to join the Register of First Time Buyers (see Section below). Assistance is provided by the Department purchasing an equity share of between 20% and 30% of the property. If, in the opinion of the Department, you do not require the level of assistance provided by the First Home Fixed Scheme you may be redirected to the open market First Home Choice Scheme. As the number of ‘approved’ properties available to sell each year is limited, being on the Register of First Time Buyers is not a guarantee that you will be allocated a property.

The type of property allocated will be assessed on housing need, and priority will always be given to existing families when allocating larger properties. The maximum permitted income levels and property values are listed below.

‘Approved’ properties are sold at a discounted rate below market value. The Department’s equity share will include half of the difference between the market rate of the property at the time of purchase and the discounted purchase price paid by you, as illustrated below.

The value of the property will be fixed at the purchase price for five years and if sold within this period it must be offered back to the Department. However, after five years the property can be sold on the open market at the current market rate, subject to the repayment of the Department’s Equity Share and any outstanding interest.

First Home Choice

The First Home Choice Scheme provides assistance of up to 30% of the purchase price for properties purchased on the Open Market. 

This Scheme allows for increased income levels and purchase prices, as shown in the table below, to enable greater flexibility in purchasing properties on the Open Market.

Persons wishing to apply for assistance under the Scheme are required to complete an application form (see downloadable documents), which includes Explanatory Notes that provide more detailed guidance on the terms and conditions of assistance.

The Schemes are funded by an annual budget. As such, if demand is high, it may be necessary to close the Scheme to new Open Market applications from time to time, subject to budget availability.

Applicants should contact the Department ahead of identifying a property to verify their eligibility for assistance, and availability of funding.  

Register of First Time Buyers

The Department maintains a Register of First Time Buyers of persons interested in purchasing a home for the first time. Only those who are on the Register of First Time Buyers will be considered for new 'approved' first time buyer and buy-back properties, which are on developments undertaken by the Department or private developers. It is necessary to complete an application form if you wish to be placed on the Register (see downloadable documents). Please also refer to the checklist, which is a simple guide to whether you may qualify to be on the Register.  

Please note that you do not have to be on the Register to be eligible for the First Home Choice Scheme assistance towards Open Market properties (see downloadable documents).

Preparing for and obtaining a mortgage

In order to purchase a First Time Buyer property, whether an 'approved' or open market dwelling, applicants must be able to secure sufficient mortgage in order to provide the majority of the funds required to purchase the property. The Isle of Man Banker's Association has provided a helpful leaflet (see downloadable documents) to give potential First Time Buyers tips on how to increase success in obtaining a mortgage. 

The purchase of a home is a major decision and is likely to require your largest ever financial commitment. Buying a property involves not just monthly mortgage repayments, but also rates, insurance and repairs and maintenance. Before considering home ownership you should seek advice from a professional mortgage/financial adviser.

First time buyer newsletter

The Department publishes an annual newsletter to provide updates regarding new, and upcoming, developments including details of the location and nature of the properties. There is also a section on Frequently Asked Questions. See downloadable documents for the latest newsletters.

For further information, please contact the Customer Services Team. Please note that all calls will be recorded for quality and training purposes.