For many first-time buyers in London, saving a deposit while paying rent is one of the biggest obstacles to buying a home. The Your First Home scheme, detailed in the Budget on 28 October 2026, aims to make that first step more manageable.
The scheme will offer eligible first-time buyers in England a government equity loan towards a qualifying new-build home, alongside their own deposit and a repayment mortgage.
For buyers considering Bermondsey, Rotherhithe, Canada Water, Deptford, New Cross, Peckham and the surrounding South East London neighbourhoods, it could introduce another route into home ownership. However, the smaller deposit is only part of the picture. Understanding which homes qualify, the ongoing costs and how the loan is repaid will be just as important.
At first glance, this may look like an excellent opportunity, particularly for buyers who have struggled to save a traditional deposit while paying London’s high rents. However, as with any government-backed financial scheme, there are several important considerations and potential pitfalls that should not be overlooked.
In this blog, we will explore how the scheme works, who can benefit from it, what the potential challenges are and, most importantly, why we believe it may not necessarily be the right solution for every first-time buyer. While getting onto the property ladder is undoubtedly appealing, it is equally important to understand the long-term financial implications and whether this scheme genuinely offers good value for money.
Your First Home combines a minimum 2.5% deposit with a 20% government equity loan and a mortgage from a participating lender. The equity loan is interest-free for the first five years.
Applications are expected to open in February 2027, with the first purchases under the scheme planned for April 2027. Customer pre-registration is due to open by the end of December 2026.
The scheme applies to eligible new-build homes bought from participating developers. It will not cover every property advertised for sale, and a recently built resale flat will not qualify simply because it is modern. Full eligibility and application guidance is still to follow.
The published guidance sets a London household income limit of £140,000 a year. Buyers will need to purchase their main home and secure a mortgage, subject to the lender’s affordability and credit checks.
London property price caps are:
| Location | Maximum property price |
|---|---|
| Inner London | £650,000 |
| Outer London | £500,000 |
These are purchase-price limits, rather than amounts buyers can automatically borrow. The government uses the London Plan 2021 definitions for inner and outer London.
Before reserving a property, check its eligibility and the applicable cap against the scheme’s final guidance. Being below a price cap does not establish that either the home or the buyer qualifies.
For an eligible buyer purchasing a qualifying £400,000 home with the minimum deposit, the funding would break down as follows:
| Funding source | Amount |
|---|---|
| Buyer’s deposit: 2.5% | £10,000 |
| Government equity loan: 20% | £80,000 |
| Repayment mortgage: 77.5% | £310,000 |
| Total purchase price | £400,000 |
For comparison, buying the same property with a standard 95% mortgage would require a £20,000 deposit and a £380,000 mortgage.
The scheme therefore reduces both the initial deposit and the mortgage required. However, the £80,000 equity loan remains repayable separately.
This is an illustration of the announced funding structure, rather than a mortgage offer. Legal costs, any Stamp Duty due, mortgage fees and moving expenses would need a separate budget.
The government’s published interest schedule is:
| Period | Equity-loan interest rate |
|---|---|
| Years one to five | 0% |
| Year six | 1.5% |
| From year seven | 3% |
Interest payments do not reduce the outstanding equity loan.
The amount needed to repay the loan is linked to the property’s value. Under the published approach, a 20% equity loan would normally require repayment of 20% of the home’s independently assessed value. The repayment can therefore rise or fall.
The loan will normally be repaid when the property is sold, although earlier repayments will be possible. Further details about valuations, fees and repayment arrangements are still due before applications open.
For buyers, this makes the longer-term budget essential. Discuss how you might manage the interest charges and eventual repayment with an independent mortgage adviser, and ask your solicitor to explain the legal terms before committing.
Government-backed homeownership schemes are nothing new. The previous Conservative government introduced Help to Buy in 2013, presenting it as a way to help first-time buyers onto the property ladder.
While these initiatives may appear to offer an excellent opportunity, at Alex & Matteo Estate Agents, we have serious concerns about their long-term consequences, based on what we have witnessed in the South East London property market over the years.
In our view, schemes of this nature can sometimes serve political interests as much as they help buyers. Making homeownership appear more accessible is understandably attractive to younger voters, but there is also a risk that these initiatives benefit large property developers more than the people they are intended to support.
Much like some Shared Ownership properties, homes purchased through government-backed schemes can sometimes be priced at a premium because they are made more accessible to buyers who might otherwise struggle to get onto the property ladder. In other words, the affordability benefits and reduced deposit requirements can come at a hidden cost: the initial purchase price may be higher than the property’s actual open-market value.
This can create significant challenges when it comes to resale, as buyers may find themselves struggling to sell without accepting a substantial financial loss. We regularly deal with homeowners who find themselves having to sell their properties for as much as 25% less than their original purchase price.
The important point is that a property being easier to buy does not necessarily mean it represents good value for money or a sound long-term investment.
Another concern is the construction quality of certain large-scale new-build developments. While not all new homes are poorly built, some developments have been constructed using relatively inexpensive materials, leaving buyers facing disappointing finishes, maintenance problems and potentially significant service charges.
Matteo comments:
“I generally try to avoid taking strong positions on government policies or political decisions. However, this is one subject I feel particularly strongly about, because I see the consequences with my own eyes through the work we do every day.
We regularly meet young homeowners who bought their first property believing they were making a sensible investment and taking an important step towards financial security. Years later, some find themselves stuck with properties they struggle to sell, often facing substantial financial losses. It is genuinely frustrating to see people who worked hard to save for their first home ending up in this position.
Based on my personal experience in the property market, I believe schemes like Your First Home and Shared Ownership deserve much greater scrutiny.
While I appreciate that governments may genuinely want to help first-time buyers, I also believe these schemes can be politically convenient, particularly when it comes to appealing to younger voters. At the same time, they can create significant opportunities for large developers, who may ultimately benefit more than the buyers themselves.
Of course, not every new-build property is a bad purchase, and not everyone who buys through these schemes will lose money. But I have seen enough cases to question whether the long-term interests of buyers are always being properly considered.
If you love new-build properties, my advice is simple: buy one when you can genuinely afford it, rather than stretching your finances simply because a government scheme makes the purchase appear more accessible.
If you are looking for a home that you can enjoy living in, but also want to give yourself a reasonable chance of preserving or increasing its value when you eventually sell, I would generally recommend considering well-built properties outside these schemes.
No property investment comes with guarantees, and older properties carry their own risks. However, in my personal opinion, some of these schemes can make buying a home look considerably more attractive than the long-term financial reality.
I sincerely hope Your First Home delivers better outcomes for buyers than some of the schemes we have dealt with in the past. But until then, I remain sceptical.
For me, the danger is that what looks like a helping hand today could turn into a financial burden tomorrow. And that is why I believe buyers should look beyond the attractive headline and carefully consider what they are actually purchasing.”
At Alex & Matteo, we can help you explore the local property market, arrange viewings and compare the homes available across our South East London areas.
You can browse our properties for sale or speak to our team about your preferred location, budget and timescale.
Scheme eligibility must be confirmed through the official process, with mortgage and legal advice provided by the relevant professionals. Any property’s participation should be checked individually.
Applications are expected to open in February 2027. Pre-registration is planned by the end of December 2026, ahead of the first scheme purchases in April 2027.
No. The announced scheme covers eligible new-build homes from participating developers.
No. It is repayable and linked to the home’s value. The initial interest-free period does not remove the repayment obligation.
Information checked on 29 October 2026. Read the official Your First Home guidance and Budget 2026 document for the published announcements. Further scheme rules are due before applications open.
Alex & Matteo team