Nearly four in five UK adults say saving a deposit is one of their biggest housing concerns, and the same proportion worry about house prices generally. If you’re trying to buy your first apartment, those figures probably feel personal. I’ve been writing about property finance for long enough to see the same pattern repeat: people know they need help, but they don’t know which schemes actually apply to them, or how to combine them without tripping over the rules. The good news is that the landscape has shifted recently — a new permanent mortgage guarantee scheme launched in July 2025, replacing the temporary one that closed in June — and there are now more routes in than most first-time buyers realise. Here’s what you actually need to know.
That last figure — more than 53,000 mortgages completed with help from the mortgage guarantee scheme — shows just how many people have already used government backing to buy with a smaller deposit. The new permanent version, sometimes called the Freedom to Buy scheme, keeps that door open. But it’s only one option. If you’re looking at apartments specifically, you’ll also want to think about leasehold terms, service charges, and how a property tax specialist can help you avoid surprises later. A smart leak detector like the X-Sense Wi-Fi Water Leak Detector might seem unrelated, but in a leasehold apartment, undetected water damage can lead to expensive service charge disputes — something worth preventing before you move in.
How the main first-time buyer schemes actually work
The most important thing to understand is that these schemes aren’t mutually exclusive — you can often use a Lifetime ISA alongside a mortgage guarantee or shared ownership. The trick is knowing which combination fits your situation. Let me walk through the core options.
The mortgage guarantee scheme is probably the most straightforward path. You put down 5%, the lender gives you a mortgage for the other 95%, and the government backs part of it. The original version helped complete more than 53,000 mortgages, and the new permanent scheme keeps that option open indefinitely. What I’d do first is check with a mortgage broker whether lenders in your area are offering 95% mortgages under the new scheme — not all lenders participate, and rates vary.
The Lifetime ISA is a separate tool that works alongside any mortgage. You can save up to £4,000 each year, and the government adds a 25% bonus — that’s up to £1,000 annually. You need to have the account open for at least 12 months before you can use the bonus, and the property you buy must cost £450,000 or less. If you’re buying in London, that cap still applies, which is worth noting because some new-build apartments in the capital push past it. If you already have a Help to Buy ISA from before it closed to new applicants, you can keep saving up to £200 a month, but the maximum bonus is capped at £3,000 on total savings of £12,000.
Shared ownership is a different model entirely. You buy a share of the property — typically between 10% and 75% — and pay rent on the rest. Your deposit is 5% of the share you’re buying, not the full market value. So if you’re buying a 25% share of a £200,000 apartment, your deposit is 5% of £50,000, which is just £2,500. That sounds great, but there are catches. All shared ownership properties are leasehold, which means you’ll pay a monthly service charge and potentially contribute to major maintenance works. A National Audit Office investigation found that many buyers don’t fully understand these longer-term financial risks. If you’re looking at an older apartment block, understanding building age becomes even more important because older buildings often mean higher maintenance costs.
Where first-time buyers trip up — and how to avoid it
I’ve seen the same mistakes come up again and again. The research backs it up: many buyers don’t fully understand the long-term costs of the schemes they choose. Here are the most common traps.
Overlooking the Lifetime ISA 12-month rule
You can open a Lifetime ISA at any point between ages 18 and 39, but you can’t use the bonus until the account has been open for at least 12 months. If you’re planning to buy within the next year, a Lifetime ISA won’t help you yet. The fix is simple: open one as early as possible, even if you’re not sure when you’ll buy. The 25% bonus is essentially free money toward your deposit.
Assuming shared ownership is cheaper overall
The upfront cost is lower, but the ongoing costs add up. You pay rent on the share you don’t own, plus a service charge and maintenance fees. In some cases, the combined monthly cost can be higher than a standard mortgage on the full property. The National Audit Office found that many shared ownership buyers don’t fully grasp these long-term risks. Before you commit, ask for a full breakdown of all monthly charges and check whether the lease includes any major works scheduled in the next five years.
Ignoring the First Homes discount conditions
First Homes gives you at least 30% off the market price on a new-build property, but the discount is attached to the property permanently. That means when you sell, the next buyer also gets the discount — you don’t pocket the full market gain. It’s a great way to buy cheaply, but it’s not an investment that will appreciate in the usual way. Eligibility is also income-based: your household income must be £80,000 or less (or £90,000 or less in London).
Not checking whether the mortgage guarantee scheme applies to your apartment
The new permanent mortgage guarantee scheme launched in July 2025, but not all lenders are participating, and some have restrictions on property types. Flats and apartments can be harder to finance under guarantee schemes because lenders see them as higher risk, especially if the building has cladding issues or a short lease. Before you fall in love with an apartment, check with a broker whether that specific property qualifies for a 95% mortgage under the scheme. A viewing checklist can help you spot potential red flags early.
→ Scroll right to see all columns
| Scheme | Minimum deposit | Key restriction |
|---|---|---|
| Mortgage Guarantee | 5% | Lender participation varies; property type restrictions |
| Lifetime ISA | N/A (savings tool) | Property must cost £450,000 or less; 12-month waiting period |
| Shared Ownership | 5% of share | Leasehold only; ongoing rent and service charges |
| First Homes | 5% | Income cap of £80,000 (£90,000 London); discount stays with property |
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How to choose the right financing path for your first apartment
There’s no single best option — it depends on your income, savings, and the type of apartment you’re after. Here’s how to work through the decision.
Start with your deposit size
If you have a 5% deposit, the mortgage guarantee scheme is your most direct route. You’ll need a mortgage for the remaining 95%, and the government’s backing makes lenders more willing to offer it. If you have less than 5%, shared ownership might be your only option, since you only need 5% of the share price rather than the full property value. If you have more than 5%, you might qualify for better mortgage rates by putting down 10% or 15%, which reduces your loan-to-value ratio.
Maximise your Lifetime ISA bonus
If you’re at least 12 months away from buying, open a Lifetime ISA immediately and set up a direct debit for £333 a month — that hits the £4,000 annual limit. The government adds £1,000 each year. Over three years, that’s £3,000 in free money toward your deposit. Just make sure the apartment you’re targeting costs £450,000 or less. If you’re in London and prices push above that, the Lifetime ISA won’t help, and you’ll need to rely on other schemes.
Consider shared ownership for lower upfront costs
If your savings are limited but you have a steady income, shared ownership lets you buy a smaller stake and pay rent on the rest. In England, you can buy as little as 10% initially, though many schemes require at least 25%. Your deposit is 5% of that share. The trade-off is that you’re a leaseholder, which means service charges and potential major works costs. If you’re looking at a newer apartment with a long lease and a well-managed building, the risks are lower. A sustainable apartment with modern construction might also have lower running costs.
Check First Homes if you’re in England
The First Homes scheme offers at least 30% off the market price on new-build properties. That discount is permanent, so you buy at a lower price and sell at a lower price later. It’s designed for first-time buyers and key workers with household incomes under £80,000 (£90,000 in London). The properties are capped at £250,000 (£450,000 in London). If you find a new-build apartment within those limits, this can be the cheapest way in — but you won’t benefit from full market appreciation when you sell.
Understand the Welsh and Scottish alternatives
If you’re buying in Wales, the Help to Buy equity loan scheme is still running until September 2026. You put down a 5% deposit, the government lends you 20% (interest-free for the first five years), and you need a mortgage for the remaining 75%. The property must cost £300,000 or less. In Scotland, the Open Market Shared Equity (OSME) scheme lets you buy a share of a property — usually 60% to 90% — with the government owning the rest. If you’re in London, the Discount Market Sale (also called Council Shared Equity) offers around 20% off a new-build property, but your household income can’t exceed 45% of the purchase price.
Frequently asked questions
Can I use a Lifetime ISA and shared ownership together? ▾
What happens if I withdraw from my Lifetime ISA before buying? ▾
Does the mortgage guarantee scheme work for flats with cladding? ▾
Can I buy a second-hand apartment with First Homes? ▾
What’s the difference between the old and new mortgage guarantee schemes? ▾
Do I need a property lawyer to use these schemes? ▾
The key takeaway is that there are more ways into your first apartment than most people realise, but each one comes with its own trade-offs. My advice is to start with your deposit amount and your timeline, then match those to the scheme that fits. Open a Lifetime ISA as early as possible, even if you’re years away from buying — that 25% bonus is too good to leave on the table. And before you commit to any scheme, get a full breakdown of all ongoing costs, especially for shared ownership and leasehold apartments. If this was useful, you might also want to read savvy tips for buying an apartment in the UK.
Sources and Further Reading
Key tips for investing in multi-family apartments in the UK — A deeper look at buying larger properties, useful if you’re thinking beyond your first home.
Government house buying schemes guide. HOA UK, 2025.
First-time buyer schemes explained. Which?, 2025.
Complete guide to property financing in the UK. Sellto, 2025.
