Mortgage Guarantee Scheme 2021-2022

July, 2022

This government backed Mortgage Guarantee scheme is designed to help buyers with a 5% deposit buy a home. Learn how the 95% mortgage guarantee works and how to find the lenders that offer this.

Mortgage guarantee scheme: the basics

From 19th April 2021 the mortgage guarantee scheme allows you to get a mortgage with just a 5% deposit. The 95% mortgage scheme will run for 18 months until December 2022.

95% mortgages virtually disappeared when the pandemic started. Now that the government will offer lenders a guarantee, this will encourage them to lend again.

The scheme applies to all types of properties (new build and old) that cost less than £600,000. First time buyers AND existing homeowners can apply.

You will be able to fix your initial rate for 5 years if you wish to. You must have a regular income, a good credit rating and show that you can afford the monthly mortgage repayments.

How do I apply for the mortgage guarantee?

Once you have found a property you want to buy, to access the mortgage guarantee scheme, you need to find a mortgage from one of the participating lenders. A good mortgage broker can walk you through your options and find the best deal for you.

Will all mortgage lenders offer 95% mortgages?

Big name lenders Lloyds, Natwest, Santander, Barclays and HSBC will be offering rates for those with as little as a 5% deposit and Virgin Money a little bit later.   Although rates will still be higher than for those with bigger deposits, the wider choice has helped improve the options.

Is the mortgage guarantee scheme the best way to get a mortgage?

Not necessarily.  The guarantee will help to boost the number of 95% mortgages as they virtually disappeared from the market when the pandemic hit.  It makes no real difference to you as a borrower whether a deal is backed by the government’s mortgage guarantee or not, so the mortgage interest rate, terms and any mortgage fees will be your guide as to the best deal with the deposit you have.  It is worth noting, that if you can push to a 10% deposit rates are considerably cheaper and there are more products on the market.

How long will the mortgage guarantee scheme run for?

The plan is for the mortgage guarantee scheme to run for 18 months, from April 2021 until December 2022.

Not quite ready to buy — see what steps you can take to save to buy

It’s always a good idea to save as much as you can in advance of buying, as this obviously reduces the amount that you will have to pay back in the long term and also gives you a much wider choice of cheaper mortgage products in the short term. Here are the steps you can take to get yourself in a position to afford to buy. 

You’ll need to work out how much you can afford to buy and, in return, how much you will need to save to be able to buy your first home.

Getting your credit rating in order is key to mortgage success.

If you are under 40, the Lifetime ISA could be a great way to boost your savings.  You can earn up to a £32,000 government bonus on your savings which you can use towards buying any home worth up to £450,000 or for your pension income after you reach 60.

If you are unsure of your options, speak to an independent mortgage advisor for advice and support.

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