Could a new government scheme help you buy your first home without the ‘bank of mum and dad’?

If you’re struggling to save enough for your first home, a new government scheme could help you get on the property ladder, even if you can’t rely on the so-called ‘bank of mum and dad’.

The government has announced Your First Home, a proposed scheme aimed at helping more first-time buyers into homeownership, particularly those who have a regular income but don’t have family financial support to help with their deposit.

For many aspiring first-time buyers, help from parents has become an important way of getting onto the housing ladder. Research found that in 2023, 57% of Gen Z adults buying their first home received financial support from their parents.

That was up from 47% in 2022, highlighting just how difficult it can be for younger buyers to save a large enough deposit on their own.

What’s Your First Home?

The Your First Home scheme is designed to tackle one of the biggest barriers facing first-time buyers - saving a deposit.

If you’re a first-time buyer in England with a regular income but struggling to save a large deposit, the scheme could allow you to buy a new-build home with a deposit of just 2.5%.

You could then receive an equity loan worth up to 20% of the property’s value to help fund your purchase.

The loan would have an initial interest-free period. This could mean that, if you qualify, your monthly housing costs are lower than they would be with a 95% mortgage, potentially saving you hundreds of pounds a month.

The scheme would also include household income limits and local property price caps, with the aim of targeting support at first-time buyers who need it most.

Housing developers would also contribute towards the running costs of the scheme. The government hopes this will give developers greater confidence to build more new homes.

How much could you borrow?

The average first-time buyer property currently costs around £230,000, according to Rightmove.

If you were buying a property at this price under the proposed scheme, you would need a 2.5% deposit of £5,750.

You could then potentially access an equity loan of up to £46,000, equivalent to 20% of the property value.

That could reduce the amount you need to borrow through a mortgage, and could make buying your first home more achievable if you don’t have the ‘bank of mum and dad’ to fall back on.

When will we know more?

The full details of the Your First Home scheme are expected to be confirmed in the government’s autumn budget on 28 October.