Head of Content
Mortgage Advisor & Director
What is the new 95% mortgage guarantee scheme?
Announced as part of the March Budget, the new mortgage guarantee scheme is designed to help buyers with a 5% deposit to buy a home.
As a result of the pandemic, almost all lenders withdrew their 95% mortgages from the market, and the new scheme offers a lifeline for prospective homeowners with small deposits.
How will the mortgage guarantee scheme work?
Under the scheme, the government guarantees the portion of the mortgage over 80% LTV, to a maximum of 95% LTV. This means that if the buyer defaults on the mortgage, the government will compensate lenders for that percentage. The new scheme is similar to a previous government scheme called the Help to Buy mortgage guarantee scheme, which ran from 2013 to 2016.
Who is eligible for the mortgage guarantee scheme?
Unlike some of the other home buying schemes, the mortgage guarantee scheme is open to both first-time buyers and home movers alike, all across the UK.
Here are a few other points on eligibility:
- Properties up to £600,000 are permitted
- You must have a repayment mortgage rather than interest-only.
- You must pass affordability and credit checks
- The loan to value must be between 91-95%
- You can't use the scheme for a second home or buy to let property - you must be buying the home to live in yourself.
When does the mortgage guarantee scheme open?
You can apply now! The scheme opened in April 2021 and will end in December 2022.
Which lenders are offering the mortgage guarantee scheme?
Several high street lenders have opted into the scheme, including HSBC, Lloyds Bank, Barclays, NatWest and Santander and Virgin Money.
What are the alternatives to the mortgage guarantee scheme?
You might consider the Help to Buy equity loan scheme, the Help to Buy shared ownership scheme or even a guarantor mortgage.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
