Mortgage First-Time Buyers UK Housing
9 minute read · Published 28 September 2026
On Friday Andy Burnham arrived in Liverpool for Labour's annual conference and announced what he called a revival of Help to Buy. The scheme has a new name — "Your First Home" — but the basic architecture will be familiar to anyone who remembers the original: a government equity loan to bridge the gap between what first-time buyers can save and what lenders will offer. The headline number is a 2.5% deposit. On the national average first-time buyer property of £230,000, that is £5,750. The government lends you 20% of the purchase price — £46,000 — interest-free initially, and you take out a mortgage for the remaining 77.5%.
Burnham's framing was personal. "Let's be honest — a lot of young people have stopped believing they'll ever own their own home. That's what happens when rents are high, house prices are high, and saving for a deposit feels impossible." That sentiment is real and widespread, and I do not think he is wrong about it. The question worth asking — and the one the announcement has predictably not answered yet — is whether this particular intervention actually fixes the problem or just moves it around.
The full detail comes at the Budget on 28 October. Income caps, local property price caps, the length of the interest-free period, developer contribution requirements — none of that has been specified. So this is a framework, not a fully formed policy. But the framework tells us enough to have a proper conversation about it. Here is my honest read.
The structure is an equity loan, not a grant. The government is not giving you money. It is lending you 20% of the purchase price, initially interest-free, and it will want that money back — with interest after the interest-free period ends, and as a share of the sale price when you eventually sell.
That last part is important and often gets glossed over. The government does not lend you £46,000 and expect £46,000 back. It lends you 20% of the purchase price and claims 20% of the sale price when you sell. If your £230,000 house becomes worth £300,000 in ten years, the government's share is £60,000 — not the original £46,000. If house prices fall and the property is worth £200,000 when you sell, the government receives £40,000 — less than it lent. The equity loan moves with the market in both directions.
| Without scheme (5% deposit) | Your First Home (2.5% deposit) | |
|---|---|---|
| Property price | £230,000 | £230,000 |
| Deposit | £11,500 | £5,750 |
| Government loan | — | £46,000 |
| Mortgage | £218,500 | £178,250 |
| Monthly mortgage payment (4.5% rate, 25yr) | ~£1,210 | ~£985 |
| Government's share on sale at £300,000 | — | £60,000 |
The monthly mortgage payment is lower under the scheme — because the mortgage itself is smaller — which is the immediate practical benefit. The government is right that buying with a 77.5% mortgage is significantly cheaper monthly than buying with a 95% mortgage. On these numbers the saving is around £225 per month, which is real money.
But you are not paying less overall. You still owe 20% of the property's value to the government. You have traded a larger mortgage payment for a government equity stake in your home. Whether that is a good deal depends on what happens to house prices, what the interest-free period is and what the charge is afterwards, and whether you could have saved a larger deposit by waiting.
The argument for the scheme is straightforward and I find it genuinely persuasive up to a point. The deposit barrier is real. In 2026, saving a 10% deposit on the average first-time buyer property in the South East or London requires setting aside money for years while rents are high and house prices continue to drift upward. For people without parents who can help with a gift or a loan — the "bank of mum and dad" that Burnham explicitly named — this is genuinely difficult in a way that is not just a question of working harder or spending less.
A 2.5% deposit on a £230,000 property is £5,750. Most people in steady employment can save that in under a year even on modest salaries. That is genuinely different from a 10% deposit of £23,000, which might take four or five years at the same savings rate — by which point the property may well have increased in price and the 10% target has moved. The scheme addresses this specific problem directly.
The other argument in its favour is the supply side — though I am more sceptical about this one. Burnham said the scheme would give builders "the confidence to deliver the high-quality new homes the country needs." The idea is that guaranteed demand from a scheme supports housebuilder confidence and therefore construction volumes. There is some evidence from the original Help to Buy that this happened, though the broader supply impact was modest and contested. Savills' Lucian Cook made this point directly this week — in a housing market where housebuilder confidence is fragile, demand-side support can unlock supply that otherwise would not be built. That is not nothing.
The criticism is also straightforward, and it is backed by evidence rather than just politics. The original Help to Buy ran for a decade from 2013 to 2023 and supported 387,000 purchases. Academic analysis of its impact consistently found the same thing: it pushed up new-build prices. Builders, knowing buyers had access to government loans, priced accordingly. Some of the subsidy was captured by developers rather than passed on to buyers in the form of genuine affordability. The scheme helped people buy who otherwise could not have — but at prices higher than they would have been without it.
The new scheme tries to address this with developer contributions and income and price caps. But the fundamental dynamic is unchanged. You are increasing the purchasing power of a specific group of buyers in a market where supply is constrained. When demand rises and supply does not increase proportionally, prices go up. The buyers who benefit from the scheme gain access to ownership. The buyers who just miss the income cap, or who are trying to buy an existing property rather than a new-build, may find that prices in their target market have risen.
The other honest concern is the debt structure. A first-time buyer using the scheme starts with a deposit of 2.5%, a government loan of 20%, and a mortgage of 77.5%. They own 2.5% of their home outright on day one. If house prices fall — which does happen, as anyone who bought in 2007 knows — they could find themselves in negative equity on the mortgage while also owing the government 20% of a falling price. The scheme does not insulate buyers from market risk. It just changes who they owe money to.
The honest answer is: we do not know yet, because the key design choices that would determine whether it is better-targeted have not been announced. The income cap and property price caps are the critical variables. If the income cap is genuinely low enough to restrict the scheme to people who could not otherwise buy, and the property price caps are genuinely local rather than national, you have a more targeted intervention than the original Help to Buy, which was available to anyone buying a new-build under £600,000 regardless of income.
The original scheme was used heavily by people who could have afforded to buy anyway — it became a subsidy for middle-income buyers rather than genuinely helping people who had been locked out. If Burnham's version genuinely restricts access to people who need it, the price inflation problem is less severe because you are not creating a large new pool of subsidised demand across the whole new-build market.
Whether that will be the case is a Budget question. My view is that the political pressure to set the income cap generously — to maximise the number of people who benefit and can be cited in the scheme's success metrics — is considerable. A narrowly targeted scheme is better economics. A broadly accessible scheme is better politics. Watch where the income cap lands on 28 October.
If you are a first-time buyer and this scheme becomes available to you, the practical questions to work through are:
The Your First Home scheme addresses a real problem — the deposit barrier is genuinely stopping people who could afford mortgage payments from buying. Reducing the deposit requirement to 2.5% helps with that specific issue in a practical way. The concerns are also real: the evidence from the original Help to Buy is that demand-side subsidies push up new-build prices, meaning some of the benefit is captured by developers rather than buyers. The equity loan structure means you are not getting free money — you are trading a larger mortgage for a government stake in your home that rises with prices. Whether this version is better-designed than its predecessor depends almost entirely on where the income and price caps are set — information that only arrives at the Budget on 28 October. If you are a first-time buyer considering this, the most important thing is to understand the full cost of the equity loan over your likely ownership period before treating the lower deposit as a straightforward win.
The free calculator models mortgage overpayments against pension and ISA contributions — useful context when working out how your monthly budget changes under different mortgage structures.
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