The government is expected to unveil further details of its Your First Home scheme at Wednesday's Budget, a programme designed to help first-time buyers purchase property with deposits as low as 2.5%. Under the proposals, eligible first-time buyers in England would access a government-backed equity loan worth 20% of a new-build home's value. Households earning less than £110,000 would qualify, while the threshold rises to £140,000 for homes bought in London. The loans would carry an initial interest-free period, though the government has not yet specified how long that would last.
The scheme mirrors previous programmes such as Help to Buy, which also used equity loans to support home purchases. When Prime Minister Andy Burnham unveiled it at September's Labour conference, he said it would focus on those who "really need support". Unlike earlier schemes, this one restricts eligibility by income, after previous programmes faced criticism for helping wealthier households borrow more and potentially pushing up house prices.
Despite the initiative, many young people remain hesitant. Luke Anstee, a 23-year-old IT worker earning more than £25,000 annually, has been saving for three years but said home ownership remains distant. He expressed concern about taking on additional borrowing, noting that the government has not specified the length of the interest-free period. "That is still a loan," he said. "Once that interest starts kicking in on that loan, it could come back to kick you in the backside." He added that the scheme "feels like a bit of a gamble because you are relying on interest rates in the future to be stable."
Julia Weston, an estate agent with more than 30 years' experience, shared similar concerns about the scheme's long-term viability. She warned that if interest rates rise, borrowers face substantial additional costs at mortgage renewal. "If you were to take out what is effectively a shared equity loan like Help to Buy was and then interest rates go up, you have got to fold in a massive chunk of money at your five-year mortgage renewal at a higher interest rate," she said. She also highlighted the risks posed by job loss or unexpected life events that could strain buyers' finances.
For first-time buyers, the scheme offers a potential route onto the property ladder but introduces uncertainty around future interest costs and the ability to manage additional debt if circumstances change.