First-Time Buyer Mortgage Incentives in 2025: What You Need to Know

Getting on the property ladder has never been easy, but in 2025, a wave of new mortgage incentives and government-backed schemes are making it more achievable for first-time buyers. From ultra-low deposit mortgages to discounted new-build homes, here’s a breakdown of the most exciting offers currently available.

The £5,000 Deposit Mortgage

One of the most talked-about products this year is the £5,000 deposit mortgage, also known as a 99% loan-to-value (LTV) mortgage. Offered by lenders like Yorkshire Building Society and Accord Mortgages, this product allows eligible first-time buyers to purchase a home worth up to £500,000 with just a £5,000 deposit.

Key Features:

• Minimum deposit: £5,000.

• Maximum property value: £500,000.

• Loan-to-value: Up to 99%.

• Term: Up to 40 years.

• Eligibility: First-time buyers only; enhanced credit checks apply.

• Exclusions: Not available for new-builds or properties in Northern Ireland.

This product is ideal for renters who can afford monthly mortgage payments but struggle to save a large deposit.

Government-Backed Schemes for First-Time Buyers

The UK government continues to support first-time buyers through several schemes:

1. First Homes Scheme

Buyers can purchase new-build homes at a 30-50% discount off of the market value. The discount is locked into the property, benefiting future buyers as well.

Eligibility: First-time buyers with household incomes under £80,000 (£90,000 in London).

Price caps: £250,000 outside London, £420,000 in London (after discount).

Priority: Often given to key workers and local residents.

2. Mortgage Guarantee Scheme

Now a permanent fixture as of July 2025, this scheme supports lenders in offering 95% LTV mortgages, helping buyers with just a 5% deposit.

Available across the UK.

Supports home movers and first-time buyers.

Government guarantees part of the loan to reduce lender risk.

3. Shared Ownership

Buy a share (typically 25-75%) of a property and pay rent on the rest. You can increase your ownership over time through “staircasing.”

Lower upfront costs.

Ideal for those with limited deposits.

Available through housing associations.

4. Lifetime ISA (LISA)

Save up to £4,000 per year, and the government adds a 25% bonus (up to £1,000 annually). Funds can be used towards a first home worth up to £450,000.

Eligibility: Aged 18–39.

Must be used for a first home or retirement.

Developer & Lender Incentives

In addition to government schemes, many housebuilders and lenders are offering their own incentives:

• Own New Rate Reducer: Reduces mortgage interest rates (sometimes below 1%) by using developer incentives to offset interest costs.

• Cashback Offers: Some lenders offer cash bonuses when you take out a mortgage or open a linked savings account.

• Stamp Duty Contributions & Legal Fee Support: Common among new-build developers to ease upfront costs.

With rising house prices and cost-of-living pressures, these incentives can make a real difference for first-time buyers. However, it’s crucial to assess the long-term affordability of any mortgage product, especially those with high LTVs or fixed-rate periods that may revert to higher rates.

This article isn’t personal advice. If you’re not sure whether a course of action is right for you, ask for financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.