Target Group Warns Lenders to Scale Operations Ahead of 'Your First Home' Scheme Launch

Target Group has issued a warning to mortgage lenders to evaluate their operational infrastructure before the launch of the Government’s Your First Home scheme. With pre-registration starting in December, fintech leaders must ensure their technology and staffing can handle the anticipated surge in first-time buyer demand without compromising existing service levels.

What was announced

The Your First Home scheme, detailed in the recent Budget, is designed to assist first-time buyers by allowing them to purchase new-build properties with a 2.5% deposit, supported by a 20% Government-backed equity loan. The scheme is scheduled to open for pre-registration by the end of December, with full applications commencing in February and the first loans expected to be issued from April 2027. It includes specific eligibility criteria, such as household income caps of £110,000 outside London and £140,000 within the capital. Property price limits will also be enforced based on local authority median prices, with inner London capped at £650,000 and outer London at £500,000. The equity loan will feature a five-year interest-free period.

Target Group notes that while this creates a significant opportunity for lenders to expand in the new-build market, it places immense pressure on the entire mortgage lifecycle. This includes application processing, underwriting, account onboarding, and ongoing servicing. The firm argues that lenders must assess whether their current technology and workforce capacity can handle the increased volume without creating bottlenecks or degrading the experience for existing customers. To mitigate these risks, Target suggests that lenders consider outsourcing origination, administration, and collections to maintain flexibility and access established technology and expertise.

"Your First Home presents an exciting opportunity for the mortgage market, for developers and for housing supply for more broadly. However, lenders looking to take part in the scheme need to make sure their operations are ready to support it. The last thing lenders need is an increase in applications to become a challenge for the wider business because the systems, processes or resources aren’t in place to accommodate the additional demand."

Melanie Spencer, growth director at Target Group.

The companies involved

Target Group is a prominent business process outsourcer and software provider specialising in the financial services sector. Based in the UK, the company is a subsidiary of Tech Mahindra, the Indian multinational information technology services and consulting firm. Target operates as a key player in the mortgage and loan servicing market, providing the underlying infrastructure that allows banks and building societies to manage complex lending products. The firm’s expertise spans the full lifecycle of financial products, from initial origination and underwriting to primary servicing and collections. By leveraging its parent company's global scale and technological capabilities, Target Group positions itself as a bridge between traditional lending practices and modern digital requirements. It focuses on helping financial institutions navigate regulatory changes and market shifts through its proprietary technology platforms and managed services. As an FCA-regulated provider, it handles significant volumes of customer data and financial transactions, making it a critical partner for lenders looking to scale operations without the capital expenditure required to build internal systems from scratch.

What FF News has reported before

FF News has closely followed Target Group’s efforts to modernise the mortgage landscape through technological integration and strategic leadership. In late 2024, the company announced a significant move to Partner With Provenir to Supercharge Mortgage Hub Platform, aimed at enhancing real-time decisioning capabilities. This followed the introduction of a New Split Screen Interface to Mortgage Hub, designed to improve efficiency for internal users. More recently, the firm has focused on strengthening its leadership team to drive innovation. In October 2026, FF News reported that Target Group Appoints Carla Stent as Non-Executive Director to support strategic growth, followed shortly by the news that Target Group Appoints Fiona Peel as Product Manager to further refine its financial services proposition.

What this means

The Your First Home scheme effectively revives the spirit of Help to Buy, but it arrives at a time when lender margins are thin and operational resilience is under intense regulatory scrutiny. For the mortgage sector, this announcement highlights a growing divide between lenders with agile, cloud-native stacks and those still tethered to legacy systems. The five-year interest-free window creates a "ticking clock" for servicing complexity that will hit systems in the early 2030s. If lenders fail to automate the onboarding process now, they risk being sidelined by more efficient competitors or facing a backlog that damages their reputation with first-time buyers.