Andy Burnham Unveils 'Your First Home' Plan — Mortgages From 2.5% Deposit With 20% Equity Loan

Andy Burnham has announced a new help-to-buy initiative, titled Your First Home, designed to help first-time buyers struggling to get onto the property ladder. The scheme would allow buyers to access a mortgage with just a 2.5% deposit and an optional government-backed equity loan of up to 20% of a property's value.

How the Scheme Would Work

Under the proposals, eligible first-time buyers could combine a small cash deposit with a 20% equity loan to reduce the size of their mortgage. The government says the plan is aimed at people who cannot rely on family support and at encouraging builders to deliver more new homes.

"Too many young people are struggling with the cost of housing... Your First Home will get them the keys to their own front door," Andy Burnham said as he announced the plan ahead of Labour's annual conference.

Example Costs and Repayments

Using Rightmove's cited UK average price of £230,000 as an example:

• A 2.5% deposit would be £5,750.
• An equity loan of 20% would be £46,000, bringing combined upfront support to £51,750 (22.5%).
• The mortgage required after those contributions would be about £178,250.

At a illustrative mortgage rate of 4.5% over 25 years, monthly repayments on that mortgage would be roughly £990 for the initial fixed term. By contrast, a buyer putting down a standard 10% deposit (£23,000) would need a mortgage of around £207,000, which would cost about £1,150 a month on the same terms.

The new 'Your First Home' scheme will give savers access to a mortgage with just a 2.5 per cent deposit (Getty/iStock)

Repayable Equity Loan — What To Watch For

The government-backed equity loan is repayable. If the new product follows the structure of the previous Help to Buy scheme, borrowers could face initial interest-only payments on the equity loan after an initial period (the previous scheme switched to 1.75% interest-only payments after five years, rising year-on-year thereafter). Those interest payments do not reduce the loan principal; borrowers effectively hold a 20% stake owed to the state that must be repaid either early or when the property is sold.

Funding, Safeguards and Criticisms

Funding for the scheme is expected to come from reprioritised government budgets, with contributions from housing developers toward running costs. The plan is framed as building on lessons from the 2013–2023 Help to Buy programme, which supported around 380,000 purchases and — according to an official review — delivered an estimated £25bn in social value over its lifetime.

Critics of the earlier scheme argued it did not always target those most in need and may have contributed to higher house prices. In response, the new proposal includes measures intended to target support better: the government will set both a household income cap and a property price cap to limit eligibility.

Next Steps

Key details remain unconfirmed, including the exact duration of any interest-free period on the equity loan, the rate schedule for repayments, and the precise income and price caps. The government has said it will publish further details at the upcoming Budget.