Mortgage Guarantee Scheme Now Open for Applications
Following the announcement in the spring budget that the government was backing a mortgage guarantee scheme which will see home buyers being able to take out a mortgage with just a 5% deposit, applications are now open.
The aim of the scheme is to help all buyers with small deposits. This means that it’s open to those looking to move up the property ladder, not just first time buyers. In a recent statement from the minister of state for housing, the Rt Hon Christopher Pincher MP, says: “Polling has revealed that 69% of private renters and 63% of people living at their family home struggle to find many mortgages with a low deposit. This will enable more households to access mortgages on both new-build and existing homes without the need for large deposits.”
The scheme applies to those wishing to purchase a home up to the value of £600,000 and the main aim is to encourage lenders to reintroduce low-deposit mortgages following the widespread withdrawal of these products from last march when the pandemic changed every aspect of our lives. From March last year, lenders were unsure of the impact on the financial markets and property prices so largely withdrew their low LTV products and as a result, buyers required a 15 to 20% deposit to secure a mortgage deal. This priced many people out of the market especially with an unprecedented rise in house prices across the UK as demand far outweighed supply.
Many of the large high street lenders are offering 95% mortgages as a result of this scheme.