Following news of the proposed Your First Home scheme, if you’re looking to get on the property ladder, is it best to hold fire on your property search or keep exploring other options now?
Last month’s government update on its new housing scheme, Your First Home, has created a tricky dilemma for many people looking to get onto the property ladder. Should you stick with your original plan to buy soon, or wait to see how this new proposal could benefit you?
What is the Your First Home scheme?
Designed to help first-time buyers purchase a new-build home, Your First Home is a scheme that would see first-time buyers need a deposit of just 2.5% of the property price, coupled with an equity loan of 20% from the government to reduce the size of the mortgage required. This could make many first-time buyers’ property dreams a reality, especially those struggling to save for a large deposit.
However, while it seems attractive, it might not suit everyone, depending on your financial situation and property preferences. You might not realise there are already low-deposit mortgages on the market, so you don’t necessarily have to wait to make your dream home a reality.
Key things for first-time buyers to consider
While a scheme that helps first-time buyers overcome the challenge of raising a large deposit is clearly a welcome step, there are some things you should consider before putting your property search on hold:
The type of property you wish to purchase – the government’s new scheme will only be available for new-build homes. If this isn’t your preference, speaking with an advisor to find a deal that doesn’t limit you in this way is a great idea.
Current rental prices – according to the current Goodlord Rental Index, UK rents have risen by almost 5% over the past year, and in some cases, monthly mortgage repayments can be much lower. If you’re in a position to buy now rather than wait for the scheme (which isn’t expected to open for applications until February 2027), you could save money in the long run.
Details of the government-backed equity loan – while this loan could open the possibility of home ownership to people who might otherwise struggle to get on the property ladder, considering the details – and the loan’s long-term impact – when available are important. For example, how will the equity loan be repaid, how long will the interest-free period be (if any), and what impact will the loan have on remortgaging or moving home in the future?
Choice is key for home buyers
Ultimately, if you’re a first-time buyer, the new government scheme could be a welcome relief. However, it’s important to recognise that mortgage products currently on the market might better suit your financial situation and search requirements, so if you’ve been hoping to buy, you don’t necessarily have to put your plans on hold to get the best deal. Speaking to a mortgage adviser is a good first step, or download our free first-time buyer’s guide for further information.