What first time buyers need to know in October 2026
Could a smaller deposit bring your first home closer? If you are looking in North Shields or Newcastle, the newly announced Your First Home scheme may have caught your attention. Before changing your plans, separate what has been announced from what is available to apply for today.
What has the government announced
On 26 September 2026, the government announced a proposed equity loan scheme for first-time buyers purchasing eligible new-build homes in England. It is expected to combine a deposit of 2.5% with a government-backed equity loan of 20%, with an initial interest-free period. Developers would need to participate. [1]
Household income limits and local property price caps are planned. As at 5 October 2026, the announcement says further details, costs and implementation dates will be set out at the October Budget. Do not assume that a particular development qualifies or that applications are already open.
A smaller deposit still needs a workable budget
For illustration, 2.5% of a £240,000 purchase is £6,000. A 20% equity loan would be £48,000, leaving £186,000 to fund through a mortgage. This is arithmetic based on the announced structure, not an available mortgage offer or confirmation that a £240,000 home qualifies.
The important questions go beyond the deposit. What will the equity loan cost later? How will repayment be calculated? What happens if you sell or want to remortgage? The published terms will need careful review before you can compare the scheme fairly with an ordinary mortgage.
You may already have other options
The separate Mortgage Guarantee Scheme, permanently available from July 2025, supports participating lenders offering eligible mortgages at 91% to 95% loan-to-value. That can mean a deposit as small as 5%. The guarantee protects the lender against part of its potential loss; it does not guarantee that your application will be accepted. [2]
On the same illustrative £240,000 purchase, a 5% deposit is £12,000 and a 10% deposit is £24,000. The mortgage, savings left after completion and monthly costs would differ. A larger deposit may improve your choice of rates, but using every pound of savings can leave little for repairs or unexpected bills.
Budget for more than the deposit
Allow for conveyancing, searches, a survey, mortgage-related fees and moving costs. For qualifying first-time buyers in England, there is currently no Stamp Duty Land Tax on the first £300,000 of a purchase costing £500,000 or less. The portion from £300,001 to £500,000 is charged at 5%; above £500,000, first-time buyer relief is unavailable. All joint buyers must qualify. [3]
If you are comparing a flat in Tynemouth with a house in Newcastle, include any service charges or estate charges in the budget. For a leasehold home, ask your solicitor about the lease and ongoing obligations. The purchase price alone does not tell you the monthly cost of living there. [4]
Get your borrowing position checked before committing
An agreement in principle can help establish a potential budget, but it is not a mortgage offer. Full approval depends on the lender’s checks and the property. Gather evidence of your income, deposit and regular commitments so the figures can be assessed properly.
TF Financial Advisors helps first-time buyers in North Shields, Newcastle, Whitley Bay and Tynemouth. Call 0191 637 5028 or contact us to discuss your deposit and borrowing options.
Contact TF Financial Advisors | first-time buyer mortgage advice
Your home may be repossessed if you do not keep up repayments on your mortgage. Scheme details and eligibility may change. Information checked on 5 October 2026; proposed scheme terms are not confirmed product offers.
Sources
1. GOV.UK Your First Home announcement
2. GOV.UK 2025 Mortgage Guarantee Scheme