First-time Buyers

Are you a first-time buyer?

A first-time buyer is someone who has never owned a freehold or leasehold interest in a dwelling before and who is purchasing their only or main residence.

How much deposit do I need to buy a house?

Before you start looking at properties you will need to save for a deposit. You will need to have saved at least 5% to 20% of the home you would like to buy

For example, if you are looking at purchasing a home costing £400,000, you will need to save at least £20,000 (5%). Saving more than 5% will allow you access to a wider range of cheaper mortgages.

There are also government schemes that are in place to help first time buyers buy their first home more easily, such as the Help to Buy equality Loan Scheme

Help to Buy – Equality Loan Scheme

Help to Buy is a government scheme to help enable first time home buyers to get a property with only a 5% deposit.

The Scheme is running until 2023 but from 2021, there will be new regional price caps which could reduce the maximum value of homes that can be bought through the Scheme.

To qualify for this scheme, you will have to be purchasing a newly built home with a maximum purchase price of no more than £600,000. Under this scheme, with at least a 5% deposit you can borrow 20% of the purchase price interest-free for the first five years across England and if you live in London, you can borrow up to 40% of the purchase price.

The Scheme is running until March 2023 but from 2021, there will be new regional price caps which will reduce the maximum value of homes that can be bought through the Scheme, depending on where you are looking to buy.

The price caps from April 2021 are as follows:

  • North East – £186,100
  • North West – £224,400
  • Yorkshire and the Humber – £228,100
  • East Midlands – £261,900
  • West Midlands – £255,600
  • East of England – £407,400
  • London – £600,000
  • South East – £437,600
  • South West – £349,000

You do not pay any interest or fees on the government’s equity loan for the first five years. Then in the sixth year, you will be charged 1.75% interest. After then, the fee rises by inflation based on the Retail Prices Index (RPI) plus 1% each year.

How it Works

Step 1

Must be a first-time buyer

Step 2

Put down a deposit of a minimum 5% of the sale price for your new-build flat or house.

Step 3

The government lends you up to 20%, or 40% for London, of the sale price.

Step 4

Borrow the rest, up to 75%, or 55% in London from a mortgage lender on a repayment basis.

Step 5

The equity loan must be repaid after 25 years, or earlier if you sell your home.

Step 6

You must repay the same percentage of the proceeds of the sale as the initial equity loan.


For a home with a £400,000 price tag outside of London

  • £20k 5% Deposit
  • 300k 75% Mortgage from commercial lender
  • £80k 20% Government Loan


First five 5 years: the equity loan is interest-free and you pay a £1 monthly management fee by Direct Debit

Year 6: £1 monthly management fee monthly

Interest fee of 1.75% of the equity loan

Your interest fee will rise each year in April by the Retail Price Index (RPI) plus 1% until you repay your loan

Disclaimer – Scheme rules subject to change. Full details of the Government’s Equity Loan scheme can be found on the Governments website

95% Mortgage Guarantee Scheme

Another option for first-time buyers (and current homeowners alike) is the government’s 95% mortgage scheme, which could help you to secure a mortgage with just a 5% deposit.

The scheme, which launched in April, is available on mortgages for homes up to £600,000.

The government provides lenders with the guarantee they need to offer mortgages that cover the other 95%*.

Most high street lenders are now offering 5% mortgages, including Lloyds, Santander, Barclays, HSBC, NatWest and Virgin Money.

*Subject to the usual affordability checks. For more information visit

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