What happened

On 26 September the government announced Your First Home, a new equity loan scheme for first-time buyers in England. According to the announcement, it is expected to support:

  • deposits of 2.5%, backed by a 20% government equity loan
  • on new-build homes, from developers signed up to the scheme
  • with an initial interest-free period on the equity loan
  • and a household income cap and local property price caps

The caps, the interest-free period and the launch date are due to be confirmed at the Budget.

What it means if you are buying your first home

A smaller deposit can open the door sooner, and that is genuinely helpful. But an equity loan is borrowing, and the details decide whether it is a good deal for you:

  • It is new-build only. New homes often carry a premium over comparable older homes nearby. If you pay that premium, the first resale may not recover it, and your equity loan is usually tied to the home’s value when you sell or repay.
  • Check what similar homes actually sell for. Our house-price pages show what homes of each type have sold for, area by area, and how much of the local market is new build.
  • The lender still values the home. A cautious mortgage valuation on a new build can come in below the developer’s price, and that gap is yours to deal with.
  • Wait for the detail. The interest-free period, what happens after it, and the price caps in your area will shape the real cost. They are due at the Budget.

What it means if you are selling

If you are selling a starter home, some first-time buyers may now look at new builds with a 2.5% deposit instead. Resale homes compete on value, space, location and character, but the price has to make sense against what a new build with scheme support will cost a buyer each month.

First-time buyer weighing a new build against an older home? Jon can give you an independent view before you commit.

Tell Jon about your situation

Jon’s view

Schemes like this change who can buy, not what a home is worth. The buyers who do best with them are the ones who judge the house as if the scheme did not exist, then use the scheme to fund a sound purchase, rather than letting the scheme justify the price.