By Basant El-Faramawy
The UK government has announced a package of measures in the Budget aimed at helping first-time buyers onto the property ladder, including a £4.7 billion equity loan scheme and a new savings account replacing the Lifetime ISA.
Your First Home Equity Loan Scheme
The centerpiece is the "Your First Home" scheme, backed by £4.7 billion to assist around 70,000 households in England. It offers 20% equity loans with a 2.5% minimum deposit, capped at 15%. Income limits are set at £110,000 outside London and £140,000 inside London. Property price caps will reflect local median prices, with inner London capped at £650,000 and outer London at £500,000. Loans are interest-free for five years. Pre-registration opens by December 2026, full applications from February 2027, and first loans from April 2027.
Lifetime ISA Withdrawal Charge Reduced
For existing Lifetime ISA savers, the government will reduce the withdrawal charge from 25% to 20% for purchases above the £450,000 property price cap, effective October 29. This allows savers to recover the government bonus while retaining their own contributions.
New First-Time Buyer ISA Launching 2029
A new First-Time Buyer ISA will replace the Lifetime ISA from April 2029. It permits £4,000 annual contributions with a 25% bonus on the final account balance, up to £20,000 total, paid upon withdrawal for a first home worth up to £450,000. Unlike the Lifetime ISA, there is no upper age limit to open an account. Transfers from Lifetime ISAs are not allowed, but both can be used toward the same purchase.
Mortgage Rates and Additional Housing Funding
Average two- and five-year fixed mortgage rates remain just below 6%, according to Moneyfacts, amid swap rate volatility. The average asking price for a typical first-time buyer home in Britain was £225,627 in October, per Rightmove. The Budget also pledges an extra £1.5 billion to deliver around 10,000 homes in England, prioritizing social rent, bringing total investment in social and affordable housing to over £40 billion over ten years.
