Getting onto the property ladder has become increasingly difficult for any first-time buyer. Even those earning a regular income and able to afford monthly mortgage repayments can struggle to save a substantial deposit while also paying rent and everyday living costs.
A new government scheme proposed by Prime Minister Andy Burnham aims to tackle that problem.
Called Your First Home, the scheme is designed to help eligible first-time buyers purchase a new-build property with a deposit of just 2.5%, supported by a government-backed equity loan of up to 20% of the property’s value.
For prospective buyers in Leeds, it could significantly reduce one of the biggest barriers to home ownership.
How could the scheme work?
Under the proposals, eligible first-time buyers purchasing a new-build home from a participating developer would provide a minimum 2.5% deposit.
The government would then provide an equity loan worth up to 20% of the property’s value, initially interest-free. The buyer would potentially need a conventional mortgage for the remaining 77.5%.
On a £200,000 property, for example, that could mean:
- £5,000 buyer deposit
- £40,000 government equity loan
- £155,000 mortgage
For someone who can afford mortgage repayments but has struggled to build a large deposit, that could make buying a first home achievable much sooner.
Who will qualify?
Some important details are still to be confirmed.
The government has said Your First Home will include household income limits and local property price caps. The intention is to target support towards people who genuinely need help getting onto the property ladder.
The scheme is also expected to apply only to new-build homes from participating developers.
Full eligibility criteria, local price limits and details of the interest-free period are expected to be announced in the Budget on 28 October.
What could it mean for Leeds first-time buyers?
Leeds has a large population of renters, young professionals and graduates who may want to buy but find saving a deposit difficult.
Reducing the minimum deposit to 2.5% could make a substantial difference.
On a £180,000 home, a traditional 10% deposit would be £18,000. A 2.5% contribution would be just £4,500.
However, buyers need to remember that the proposed scheme is restricted to new-build properties. Anyone considering an established property in Leeds will need to explore other mortgage and deposit options.
Is it similar to Help to Buy?
There are similarities. The previous Help to Buy scheme also used government equity loans to reduce the amount buyers needed to borrow through a conventional mortgage.
However, an equity loan remains a financial commitment. Buyers will need to understand when it must be repaid, what happens if their property’s value rises or falls and what charges may eventually apply.
Those details should become clearer when the final scheme is announced.
Looking for your first home in Leeds?
Your First Home could provide another route onto the property ladder for people who have the income to support a mortgage but are struggling to save a large deposit.
At Hogan’s Estate Agents, we understand the Leeds property market and can help first-time buyers find suitable properties and navigate the buying process.
With further details expected on 28 October, we’ll be watching closely to see exactly what the scheme means for Leeds buyers.
Looking for your first home in Leeds? Contact Hogan’s Estate Agents at enquiries@hogans.co to discover properties currently available across Leeds and if you’re a landlord looking for a fast sale, our team can help you out too.
