Mortgage guarantee scheme

Available until 31st December 2022, the mortgage guarantee scheme has been introduced to help generation renters turn to home ownership – needing just a 5% loan-to-value (LTV) deposit to step onto the property ladder.

The scheme was announced in the March 2021 Budget and is designed to encourage banks to start offering 95% mortgages again, after nearly every single one was withdrawn during the coronavirus pandemic.

The mortgage guarantee scheme is similar to the 5% Help to Buy mortgage scheme which ran between 2013 and 2017. Not all lenders are taking part in the scheme, but those that are have to offer five-year fixed mortgages as part of their range of 95% LTV products.

Who is eligible to apply?

The mortgage guarantee scheme is available to both first-time buyers and home movers in the UK. New build properties* and traditional properties up to £600,000 are both eligible for the scheme, but it is not available to buy-to-let properties or second homes. You must be purchasing the property to live in yourself.

You must apply for a repayment mortgage, meaning that you won’t be able to apply for an interest-only mortgage, and you will still have to pass standard affordability checks.

*Some lenders are not allowing new build properties to be included. Please check with your chosen mortgage provider or use the support of a mortgage adviser to help find you the right mortgage for your circumstances.

For more information, visit the government website here.