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First-Time Buyer Guide 2025: Schemes and Options

20th May 2025

Getting on the property ladder remains one of the biggest financial challenges in the UK. House prices are still significantly higher relative to average incomes than they were a generation ago, and the end of the Help to Buy equity loan scheme in 2023 removed one of the most widely used routes for first-time buyers. However, there are still meaningful options available in 2025, and more people than many realise are successfully buying their first home.

This guide sets out the main routes available and how a mortgage broker can help you navigate them.

How Much Deposit Do You Need?

Lenders typically require a minimum deposit of 5% of the purchase price. On a £250,000 property that is £12,500. However, you will usually access better interest rates with a larger deposit. The most competitive deals are generally available at 60% loan-to-value (a 40% deposit), but meaningful improvements in rate are also available at 80% and 85% LTV.

For most first-time buyers, saving enough for a deposit is the main obstacle. The longer it takes to save, the more time the market has to move. Understanding your realistic timeline — and what mortgage you could get at each stage — helps you make the right decisions about when and where to buy.

95% Mortgages

Several high street lenders offer mortgages at 95% loan-to-value, meaning you only need a 5% deposit. These products carry higher interest rates than lower-LTV deals, reflecting the greater risk to the lender, but they do allow buyers to get on the ladder sooner rather than spending years building a larger deposit.

Availability of 95% mortgages can vary. Some lenders restrict them to new build properties or apply tighter income criteria. A mortgage broker can identify which lenders are accepting applications at 95% LTV for your property type and circumstances.

Shared Ownership

Shared ownership allows you to buy a share of a property — typically between 10% and 75% — and pay rent on the remaining share to a housing association. You can increase your share over time through a process called staircasing.

The deposit required is based on your share of the property, not the full market value, which makes the upfront cost much lower. Shared ownership properties are usually new build or resale shared ownership properties, and availability varies by region. There are income limits and eligibility criteria that apply.

The Lifetime ISA

The Lifetime ISA (LISA) is a government savings account that pays a 25% bonus on contributions up to £4,000 per year. That means saving the maximum each year earns you a government bonus of £1,000. The money must be used to buy your first home (or for retirement), and the property must cost no more than £450,000.

You must be between 18 and 39 years old to open a LISA and must have held the account for at least 12 months before using it to buy. If you have not already opened a LISA and are eligible, it is worth doing so as soon as possible to start the clock running on that 12-month qualifying period.

The Mortgage Guarantee Scheme

The government’s Mortgage Guarantee Scheme encourages lenders to offer 95% mortgages by providing a government-backed guarantee on the portion of the loan above 80% LTV. This helps protect lenders against losses in the event of default, which in turn makes them more willing to lend at high loan-to-value.

Not all lenders participate in the scheme, but several major banks do. The scheme applies to properties up to £600,000 and is available to both first-time buyers and home movers.

Stamp Duty for First-Time Buyers

From April 2025, the stamp duty threshold for first-time buyers reduced from £425,000 to £300,000. Purchases up to £300,000 remain tax-free, but any amount above that up to £500,000 is taxed at 5%. Properties above £500,000 do not qualify for first-time buyer relief at all.

This is an important change to factor into your budget. If you are buying at £350,000 as a first-time buyer, you will now pay £2,500 in stamp duty that you would not have paid under the previous rules.

Using a Mortgage Broker as a First-Time Buyer

The mortgage market can be complex and confusing, particularly for those buying for the first time. A whole-of-market mortgage broker can compare deals from dozens of lenders — including some not available directly to the public — and recommend the product most suitable for your circumstances.

Brokers are also invaluable for buyers with non-standard situations: self-employed income, recent credit issues, unusual property types or complex ownership arrangements. The mortgage application process also involves significant paperwork and liaison with solicitors, surveyors and estate agents. An experienced broker can guide you through every step.

Take the First Step

Speaking to a mortgage adviser is free and does not commit you to anything. It gives you a clear picture of what you could borrow, what you would pay and what help you may be entitled to. To get started, please submit an online enquiry or call us on 0800 310 1340.

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT.