The Autumn Budget 2026, delivered by Chancellor John Healey on 28 October, introduced several changes that could affect first time buyers, homeowners and property investors.
Among the announcements were a new government-backed scheme allowing eligible first-time buyers to purchase a home with just a 2.5% deposit, changes to savings schemes and higher taxes for landlords.
But what do these changes mean if you are planning to buy a property, remortgage or expand your property portfolio?
We look at the key announcements and what you need to know.
TL;DR: Key Mortgage Changes from the Autumn Budget 2026
- First time buyers: A new Your First Home scheme offering a 20% government equity loan and deposits from 2.5%.
- Mortgage rates: Bank Rate remains at 3.75%, with the next Bank of England decision scheduled for 5 November 2026.
- First Time Buyer ISA: A new savings account offering a 25% government bonus is planned for April 2029.
- Stamp duty: No general reduction in residential stamp duty rates was announced.
- Landlords: Property income tax rates are set to increase from April 2027.
- Higher value homes: Additional council tax charges are planned for qualifying properties valued at £2 million or more in England.
Your First Home Scheme: Could You Buy with a 2.5% Deposit?
One of the biggest announcements for first-time buyers was the introduction of the Your First Home scheme.
The scheme is designed to help eligible buyers in England purchase a qualifying new-build property with a smaller deposit.
Under the announced arrangements:
- Buyers will need a deposit between 2.5% and 15% of the property price.
- The government provides a 20% equity loan.
- The equity loan will be interest free for the first five years.
- Buyers must obtain a repayment mortgage from a participating lender.
- Household income limits will be £110,000 outside London and £140,000 within London.
- Property price caps will apply, including £650,000 in inner London and £500,000 in outer London, with locally determined caps elsewhere.
Pre-registration is expected to open by the end of December 2026, with applications opening in February 2027 and the first equity loans available from April 2027.
How Would This Work?
For a property costing £300,000:
Without the scheme, a standard 95% mortgage would require a £15,000 deposit and a £285,000 mortgage.
This could make a substantial difference for first-time buyers who have sufficient income to afford mortgage repayments but are struggling to save a larger deposit.
What Is the Catch?
The government equity loan is not free money.
Although no interest is charged during the first five years, interest charges will apply afterwards, starting at 1.5% in year six and increasing to 3% from year seven under the announced arrangements.
Importantly, the amount you owe is linked to the property's value. If your home increases in value, the amount needed to repay the equity loan could also increase.
The scheme will not suit everyone, and buyers should consider the longer-term costs alongside the benefit of a smaller initial deposit.
A New First Time Buyer ISA
The government has also announced plans to introduce a new First Time Buyer ISA from April 2029, replacing the Lifetime ISA for new savers.
The proposed scheme will offer:
- Annual savings contributions of up to £4,000.
- A 25% government bonus, capped at £20,000.
- A maximum qualifying property purchase price of £450,000.
- No upper age restriction.
Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules.
Changes for Existing Lifetime ISA Holders
From 29 October 2026, the withdrawal charge for eligible first time buyers purchasing a property above the £450,000 limit Lifetime ISA limit is being reduced from 25% to 20%.
This is particularly relevant for buyers in areas where property prices exceed the existing Lifetime ISA threshold.
However, a 20% withdrawal charge still applies, so it is important to understand the financial implications before withdrawing your savings.
Has Stamp Duty Been Reduced?
No general reduction in residential Stamp Duty Land Tax was announced in the Autumn Budget 2026.
For buyers in England and Northern Ireland, existing rules continue to apply.
The amount payable depends on the purchase price, whether you qualify for first time buyer relief and whether you already own another property.
Scotland and Wales have separate property transaction tax systems.
Remember that your deposit is only one part of the cost of buying a home.
You may also need to budget for stamp duty, legal fees, surveys and mortgage related costs.
Understanding these expenses early can help you establish a realistic purchasing budget.
What Does the Budget Mean for Mortgage Interest Rates?
Although the Budget can influence financial markets, the Chancellor does not directly determine mortgage interest rates.
The Bank of England sets Bank Rate, while mortgage lenders determine their own product pricing.
Bank Rate currently stands at 3.75%, with the next Monetary Policy Committee decision scheduled for 5 November 2026.
Fixed mortgage rates are influenced by several factors, particularly swap rates, which reflect market expectations about future interest rates and funding costs.
This means fixed mortgage rates can rise even when the Bank of England Base Rate remains unchanged.
Equally, lenders may reduce fixed rates before the Bank of England announces a reduction in Bank Rate.
Rather than trying to predict exactly what interest rates will do next, it is important to understand the options available and choose a mortgage that suits your circumstances.
What Has Changed for Landlords?
The Budget introduced further increases in the rates of income tax applying to property income.
From 6 April 2027, the announced property income tax rates for individuals in England, Wales and Northern Ireland will be:
These rates apply to taxable property income rather than gross rental receipts.
For landlords who own properties personally, the increases could reduce the net income generated by their investments.
Properties held within limited companies are subject to different tax arrangements.
If you are considering purchasing another investment property, it is important to understand how mortgage costs, rental income, maintenance and taxation will affect the overall return.
At Sarah Grace Mortgages, we help property investors with a wide range of borrowing requirements, including buy-to-let mortgages, portfolio lending and limited company structures.
Our buy to let mortgage services guide explains how we can help landlords explore suitable finance options.
For specific taxation advice, we recommend speaking with a qualified tax adviser.
Additional Charges for Homes Worth £2 Million or More?
The government has confirmed further details of its planned High Value Council Tax Surcharge for qualifying residential properties in England valued at £2 million or more.
The additional charge is expected to apply from April 2028, with provisions for certain discounts, exemptions and payment deferrals.
For buyers considering higher value homes, these additional costs should form part of the overall affordability assessment.
Should You Remortgage Now or Wait?
If your existing mortgage deal is coming to an end, you may be wondering whether to secure a new rate now or wait in the hope that interest rates fall.
The difficulty is that nobody can predict future mortgage rates with certainty.
Many lenders allow you to secure a new mortgage product several months before your existing deal expires.
Depending on the lender, you may also be able to switch to a lower rate before the new deal starts if more competitive products become available.
There are generally two options to consider:
Product transfer:
Staying with your existing lender and selecting a new mortgage product. This can sometimes be straightforward and may avoid the need for a new affordability assessment or legal work.
Remortgage:
Moving your mortgage to another lender, potentially accessing more competitive rates or different product features.
At Sarah Grace Mortgages, we compare the products offered by your existing lender against those available across the wider market.
We also consider arrangement fees, any legal or valuation costs, Early Repayment Charges and the overall cost of the mortgage.
The lowest advertised interest rate is not always the cheapest mortgage overall.
If your current mortgage deal is ending within the next six months, it is worth reviewing your options rather than waiting until the last minute.
How Sarah Grace Mortgages Can Help
The Autumn Budget introduces opportunities for some borrowers and additional costs for others.
Understanding how these changes affect your individual circumstances is the important part.
At Sarah Grace Mortgages, we provide whole-of-market mortgage advice, specialising in clients whose borrowing requirements may not always fit standard lending criteria.
We have particular expertise in helping dentists, business owners, limited company directors and other professionals with complex income arrangements.
Different lenders assess income differently. For example, some lenders assess limited company directors using salary and dividends, while others may consider salary plus their share of company profit before or after corporation tax.
Understanding these differences can have a significant impact on how much you may be able to borrow.
Whether you are buying your first home, reviewing your existing mortgage or investing in property, we can help you explore your options.
Call Sarah Grace Mortgages on 0203 6333 888 or contact our team to arrange an initial conversation.
Frequently Asked Questions
Can I buy a property with a 2.5% deposit?
Under the new Your First Home scheme, eligible first-time buyers in England will be able to purchase qualifying new-build properties with a deposit from 2.5%, subject to the scheme's requirements and lender affordability assessments.
Will mortgage rates fall after the Budget?
Not necessarily. Fixed mortgage rates depend on several factors, including swap rates, funding costs and lenders' pricing decisions. A Budget announcement does not automatically result in lower mortgage rates.
Has stamp duty been reduced?
No general reduction was announced in the Autumn 2026 Budget. Existing stamp duty rules and applicable reliefs remain relevant to property purchases.
Will landlords pay more tax?
From April 2027, the announced property income tax rates will increase to 24%, 44% and 49% for the relevant tax bands in England, Wales and Northern Ireland.
Should I wait for interest rates to fall before remortgaging?
Reviewing your mortgage options in advance can help you understand what is available and potentially secure a suitable product before your existing deal expires.
Could the Budget affect how much I can borrow?
Potentially. Changes to taxation, household expenses and mortgage interest rates can influence affordability. However, lenders will continue assessing your income, expenditure, existing commitments and individual circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Sarah Grace Mortgages Limited is authorised and regulated by the Financial Conduct Authority. FCA reference number 771962. Registered in England and Wales, company number 09839864.
The Financial Conduct Authority does not regulate most forms of commercial buy to let mortgages and mortgages to limited companies.
