A new government-backed mortgage scheme to help people with 5% deposits get on to the housing ladder has been available to lenders from 19th April 2021.

First announced at the Budget, the scheme will help first time buyers or current homeowners secure a mortgage with just a 5% deposit to buy a house of up to £600,000 – providing an affordable route to home ownership for aspiring home-owners.

The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.

The scheme is now available from various lenders on the high streets across the country. 

Whilst this seems like a great ‘fix all’ solution for many first time buyers, there are some things to be aware of first. As well as meeting the lender’s eligibility criteria, the mortgage guarantee scheme itself has a set of requirements that the borrower must meet to qualify.

The restrictions you’ll encounter are as follows…

• Reserved for customers with 5-9% deposit
• Property must be valued at under £600,000
• Property must be a primary residence, not a second home or a buy to let
• Mortgage must be offered on a repayment basis, not interest only
• Applicant must be an individual or individuals, not a company
• Lenders are not offering guarantee scheme mortgages on new-build homes

If you have any questions regarding the Mortgage Guarantee Scheme, or would like to know if you are eligible, contact us today.