The mortgage guarantee scheme allows would-be property buyers access to 95% loan to value (LTV) mortgages – meaning you need a 5% deposit – on properties worth up to £600,000
The mortgage guarantee scheme, which allows first-time buyers to take out a mortgage with a 5% deposit, has been extended again.
Following the Autumn Statement, the mortgage
guarantee scheme sees first-time buyers take out a mortgage with a 5% deposit – the Government then promises to cover some costs if your lender loses money.
The scheme was launched in April 2021 to increase the number of 5% deposit deals on the market, following the coronavirus pandemic. It was extended for 12 months last year and was due to end this year in December 2023. It will now run until June 2025.
The bigger your deposit – the more you can reduce your interest rate – the less your monthly repayments and fees will be.
The obvious perk of the mortgage guarantee scheme is that it allows first-time buyers to purchase a property with a smaller deposit – but it has been previously criticised for having more expensive rates compared to higher deposit home loans.
The mortgage guarantee scheme allows wouldbe property buyers access to 95% loan to value (LTV) mortgages – meaning you need a 5% deposit – on properties worth up to £600,000. You must have a deposit equivalent to between 5% and 9%.
The Government then provides the guarantee for the mortgage to reduce the risk for the lender – for example, if the owner falls behind on payments and the property is repossessed, but the sale prices does not cover the outstanding mortgage amount.
The Government guarantees the portion of the mortgage over 80% – so, with a 95% mortgage, the remaining 15%.
The bigger your deposit – the more you can reduce your interest rate – the less your monthly repayments and fees will be.