The government’s mortgage guarantee scheme, which launched in April 2021, is encouraging lenders to offer mortgage finance to buyers with smaller deposits. It has been welcome news for prospective home buyers.
The scheme works as follows. The government offers lenders a ‘guarantee’ on 95% LTV mortgages (i.e. those worth 95% of the property value, with a 5% deposit required from the buyer). The guarantee applies to the portion of the loan over 80%, with the government compensating the lender for a portion of the net losses suffered in the event of repossession.
To be eligible, you must:
- Be a first-time buyer or home mover
- Be buying a property to live in yourself
- Pass all normal affordability checks
- Be offered a mortgage between 91% and 95% LTV.
Get your foot on the ladder
Reassured by the guarantee, many high street lenders have now launched 95% mortgage deals. So, whether you’ve had to put your property dreams on hold during the pandemic or are just starting out on your homeownership journey, get in touch and we can assist you in getting the most suitable mortgage for your needs.
The scheme is due to end on 31 December 2022, subject to review.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. You may have to pay an early repayment charge to your existing lender if you remortgage.