Freedom to Buy Mortgage Scheme

With average house prices in the UK continuing to rise, for first-time buyers trying to save enough deposit the journey to homeownership feels as difficult as it’s ever been. 

It’s for this reason (and others) that the government have introduced the Freedom to Buy Scheme, a permanent fix to help people with smaller deposits get a foot on the property ladder. 

What Is the Freedom to Buy Scheme?

The Freedom to Buy Scheme is the government’s new long-term mortgage guarantee initiative, replacing the temporary scheme which was available between April 2021 and June 2025. Unlike its predecessor, this version is here to stay. 

The scheme provides a safety net for lenders to offer more 95% loan-to-value (LTV) mortgages, which in turn will give people with lower deposits more confidence to become homeowners. So, if you're considering buying a home, whether it's your first or you're moving up the ladder, this scheme could be a useful option to consider. 

How Does It Work?

The scheme works very similarly to the previous version, with lenders paying a fee to the government, securing a guarantee for part of the mortgage loan between 80% and 95% of the property value. This guarantee will cover some of the lender’s risk if things go wrong, such as a buyer defaulting and the property having to be repossessed. 

The government guarantee will provide lenders with the comfort and security they need to offer higher loan-to-value mortgages, and at competitive interest rates. 

For buyers, this means less saving, more flexibility, and a smoother route into homeownership. The scheme rolled out nationwide in July 2025 and is designed to be a stable, long-term support option for those unable to offer higher mortgage deposits. 

Who Qualifies for the Scheme?

Basically, anyone buying a home they intend to live in with at least a 5% deposit can apply. The scheme is open to both first-time buyers and home movers, as long as it’s for your main residence. 

You can only use a capital and repayment mortgage (not interest-only or offset), and there’s currently a cap on the maximum property value of £600,000. Buy-to-let and second homes are also off the table - primary residences only! As is the option to use the scheme alongside other government-backed initiatives such as shared ownership. 

Once the scheme is established further down the line, the government is also looking at making things even easier, potentially factoring in your rent payment history and income more flexibly. For now, it’s all about proving you can afford the monthly repayments based on your income and outgoings.

How Much Can You Borrow?

With the Freedom to Buy Scheme, you can borrow up to 95% of the property price. That means your deposit could be as low as 5%, depending on which lender you choose. The actual amount you can borrow will primarily be based on your income and age at the point you apply. 

Most lenders will initially look at between 4.5 and 5.5 times your salary as a starting point for how much you can borrow. For example, if you earn £40,000 a year, you might be able to borrow between £180,000 and £220,000. It all comes down to affordability, and lenders will still want to make sure you can comfortably meet your monthly mortgage repayments.

To see how this might work out for you, based on your annual income, take a look at our quick and easy-to-use affordability calculator. 

You can also use our mortgage repayment calculator below to see what the amount you're looking to borrow could cost you each month and check if this fits with your budget.

What Are the Pros and Cons of the Scheme?

There are plenty of positives. The obvious one being you don’t need to scrimp and save for a huge deposit—just 5% will do. It’s also permanent, so you’re not racing against a policy deadline, and it gives lenders a boost of confidence to offer a wider range of attractive low-deposit options.

On the flip side, borrowing more of the property price usually means paying more in interest and your monthly repayments could be higher than if you had a bigger deposit. Plus, this scheme doesn’t fix deeper housing market issues, like high house prices or limited supply.

Which Lenders Are Participating?

Most, if not all, mainstream/high street mortgage lenders are expected to be involved. Even though 95% LTV mortgages are already quite common these days, the Freedom to Buy scheme gives lenders a bit of extra reassurance, which should mean there’s a wider choice of mortgage deals now available at this level of borrowing. 

But, having more choice doesn’t necessarily make it easier to find the right mortgage deal to suit your circumstances. This is where we can help! Our mortgage team will be able to do all the hard graft for you, finding the lenders offering the most competitive low-deposit mortgage deals on your behalf. 

How Do You Get One?

You can talk to us! The good news with Freedom to Buy is it doesn’t require a separate application process. The guarantee part of the mortgage is all agreed between the lenders and the government. 

This makes the process for applying much more straightforward. If you’re interested in applying for a mortgage through the Freedom to Buy scheme and you have at least a 5% deposit, here’s how it works:

• Make an enquiry with us and a member of our mortgage team will contact you directly

• First-things-first, we’ll help you apply for a mortgage-in-principle (MIP)

• Once you have your MIP, you’ll then be able to search for properties that fit within the amount you could potentially borrow and the scheme criteria (if you haven’t already found one)

• After you’ve had an offer accepted on a property, we’ll source the best mortgage deals available from participating lenders who will arrange the guarantee element directly with the government (you don’t need to do anything!)

• We’ll help you prepare and submit your mortgage application and you can then track it’s progress every step of the way by using our simple-to-use customer portal

• When you receive your mortgage offer, all that remains will be the conveyancing and legal aspects of the purchase before completion and the keys handed to you!

What Are the Alternatives?

If Freedom to Buy doesn't quite fit what you're looking for, there are other options available for you to consider.

Shared Ownership is another popular government-backed scheme where you buy part of a property - usually between 25%-75% - and pay rent on the rest. The benefit is that your deposit is calculated on the amount you're buying, rather than the whole value, and you can keep buying more shares until you eventually own all of it.

The First Homes Scheme offers first-time buyers in England a discount of at least 30% (up to 50% in some areas) on the market value of new-build homes. The discount stays with the property for future sales, keeping it affordable for the next buyer.

If you want to find out more about these schemes, and others, take a look at our guide to Mortgage Schemes.