Housing Secretary Rt Hon Robert Jenrick MP said:
“For too many people, no matter how hard they work, home ownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot.”
Read moreHousing Secretary Rt Hon Robert Jenrick MP said:
“For too many people, no matter how hard they work, home ownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot.”
Read moreNew 95% mortgage scheme launches today
The scheme was first announced at the 2021 Budget. The new 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 the following lenders on high streets across the country,
- Lloyds
- Santander
- Barclays
- HSBC
- NatWest
- Virgin Money following next month
The COVID-19 pandemic has led to a reduction in the availability of high loan-to-value (LTV) mortgage products, particularly for prospective homebuyers with only a 5% deposit. This has left many hard-working households unable to get on to the housing ladder.
The mortgage guarantee scheme will support a new generation in realising the dream of home ownership. This will enable more households to access mortgages, without the need for prohibitively large deposits.
How does it Work?
The government will provide lenders with the option to purchase a guarantee on the top-slice of the mortgage. In other words, the government will compensate the mortgage lender for a portion of the net losses suffered in the event of repossession. The guarantee will apply down to 80% of the purchase value of the guaranteed property.
The guarantee will be valid for up to 7 years after the mortgage is originated, evidence shows that loans are unlikely to default after such a period has elapsed.
How long is the Scheme valid for?
The scheme is intended as a temporary measure. It will be open for new mortgage applications from April 2021 to December 2022, in line with the government’s view that the current scarcity of high loan-to-value lending is primarily a response to the pandemic rather than a symptom of a longer-term structural change in the mortgage market.
How long is the Scheme valid for?
The scheme is intended as a temporary measure. It will be open for new mortgage applications from April 2021 to December 2022, in line with the government’s view that the current scarcity of high loan-to-value lending is primarily a response to the pandemic rather than a symptom of a longer-term structural change in the mortgage market.