The UK Budget on 28 October 2026 included changes to first-time buyer savings and announced a new equity-loan scheme. Not everything starts immediately. Here is what was announced, who it may affect and when the changes are due.
At a glance: what changes, and when?
| Measure | Timing | Main point |
|---|---|---|
| Lifetime ISA withdrawal change | 29 October 2026 | 20% charge for eligible first-home purchases above £450,000; other unauthorised withdrawals still 25% |
| Your First Home equity loan | Applications planned February 2027; first loans April 2027 | Proposed 20% equity loan for qualifying first-time buyers, with restrictions |
| First Time Buyer ISA | Planned April 2029 | New savings account for first-home purchases; not available yet |
1. Lifetime ISA: a narrower withdrawal charge change
From 29 October 2026, the Lifetime ISA (LISA) withdrawal charge is reduced from 25% to 20% for a first-time buyer using LISA savings to purchase a first home above the £450,000 property price cap, where the other qualifying conditions are met. The usual 25% charge still applies to other unauthorised withdrawals. This is not a general reduction in the LISA withdrawal penalty.
A simple £10,000 example
On a £10,000 LISA balance, a 25% withdrawal charge would leave £7,500. A 20% charge would leave £8,000 — a difference of £500. This is an illustration of the charge, not a forecast of savings growth or a statement that every withdrawal qualifies. The balance may include government bonuses and investment returns.
For eligibility details and the legal implementation, see HMRC's explanation of the LISA change.
2. Your First Home: an equity-loan scheme planned for 2027
The government announced a £4.7 billion Your First Home scheme intended to support around 70,000 first-time buyers. Under the announced design, eligible buyers could receive a government equity loan of 20% of the property's value, with a five-year interest-free period. A government equity loan is not a gift: it creates an obligation to repay under the scheme's terms, and the amount owed may depend on the property's value.
The Budget says the deposit requirement is intended to be 2.5%, with a maximum deposit of 15%. Announced household income limits are £110,000 outside London and £140,000 in London, with local property price caps. Other eligibility criteria and participating properties matter too. The government plans pre-registration by the end of December 2026, full applications from February 2027 and the first loans from April 2027. The scheme is not currently open for full applications.
Before comparing options, it helps to understand the wider costs of buying: deposit, legal fees, surveys, mortgage fees and ongoing household bills. Our free mortgage affordability calculator can help illustrate repayments and affordability assumptions, but it does not assess eligibility for this government scheme.
3. First Time Buyer ISA: planned for April 2029
The Budget confirmed plans for a First Time Buyer ISA from April 2029, replacing the Lifetime ISA for new savers. The announced design allows contributions of up to £4,000 per year, a 25% government bonus on the eligible balance at withdrawal, a £450,000 property purchase cap and a maximum bonus of £20,000. Unlike the existing LISA, the proposed account would have no upper age restriction.
This is a future scheme, not an ISA you can open today. Existing LISA holders are expected to be able to continue using and contributing to their accounts under the applicable rules. Full provider and implementation details may evolve before launch.
What has not changed overnight?
These announcements do not mean every first-time buyer qualifies for an equity loan, that the £450,000 LISA property limit has disappeared, or that existing mortgage costs have automatically fallen. A mortgage lender's own criteria, interest rates, fees, and affordability assessment still matter. Property transaction taxes also vary across England and Northern Ireland, Scotland and Wales.
Explore the numbers, without guessing
- Use the mortgage affordability calculator to explore illustrative monthly repayments and borrowing assumptions.
- Use the mortgage calculator to compare loan sizes, rates and terms.
- Read the hidden costs of buying a house for expenses beyond the deposit.
Common questions
Has the Lifetime ISA withdrawal penalty been removed?
No. The charge is reduced to 20% only for the specified above-£450,000 first-home purchase withdrawals. Other unauthorised withdrawals remain subject to the 25% charge.
Can I apply for Your First Home now?
Not for a full application as at 31 October 2026. The government has announced a timetable aiming for pre-registration by the end of December 2026, applications from February 2027 and loans from April 2027.
Is the First Time Buyer ISA available now?
No. The planned start is April 2029.
Official sources and last checked
Last checked: 31 October 2026. This article provides UK-focused general education, not personalised financial, tax or mortgage advice. Scheme details, eligibility and effective dates should be checked against the latest official guidance before acting.
