The Budget of 2021 saw the UK Treasury announcing another state-funded scheme aimed at helping to keep the UK housing market fluid. Known as The Mortgage Guarantee Scheme, the newly announced initiative launched officially in April 2021.
The scheme offers lenders to both first-time buyers and those that have previously owned a home a government-backed guarantee, meaning that should the home reduce in value and need to be sold, the lenders are effectively insured for any loss. This scheme has resulted in the increased availability of 95% Loan to Value mortgages coming back in the first two quarters of 2021.
This is good news for borrowers with only small deposits. It means that even if you only have a 5% deposit, you may be able to obtain a mortgage on the remaining 95% of the purchase price, up to £600,000.
Several major mortgage lenders are already offering mortgages on this basis, but more are now expected to join the market.
The government plan is to close the scheme in December 2022, so interested parties should get their skates on if they wish to take advantage!