How Can I Benefit From The Mortgage Guarantee Scheme As A First-Time Buyer?

As a first-time buyer, the Mortgage Guarantee Scheme can help you become a homeowner with just a 5% deposit. The UK Government Scheme offers lenders the financial guarantees they need to provide a 95% mortgage on houses worth up to £600,000, as long as buyers meet the affordability checks. The Mortgage Guarantee Scheme launched in April 2021. It was due to close by the end of 2022, but it has been extended until the end of 2023. 

Besides helping over 24,000 households get onto the property ladder, the Scheme has also supported the housing sector in the current economic climate. For instance, in January 2021, the availability of 95% Loan-To-Value (LTV) products dropped to just eight. With this Scheme currently in place, competition has returned as it has encouraged more lenders to keep mortgage products on the market.

With this Scheme, lenders offer 95% mortgages with interest rates fixed for at least five years and the government guarantees up to seven years after you secure the mortgage. The mortgages offered are subject to affordability checks, including verifying your salary, other sources of income, outgoings, debts, dependents, and credit history.

To be eligible for the Scheme, you need to meet the following requirements:

Once your offer on the house is accepted, you can apply for a loan with a bank backed by the Government’s Mortgage Guarantee Scheme. Some banks that are linked to this Scheme include Lloyds Bank, Bank of Scotland, Barclays Bank, and Halifax.

A few things to note are that the Scheme is strictly for individuals and not companies, there are no interest-only mortgage options and you cannot use the Scheme for buy-to-let properties.

A 95% mortgage enables you to borrow up to 95% of the house’s purchase price, with the remaining 5% made up of your deposit. For instance, if the house you’re buying is worth £300,000, the bank will lend you £285,000, so you’ll need a deposit of £15,000. The interest rates available on a 95% mortgage are usually around 5.4%. However, this fluctuates and the higher your deposit, the better your rate will be.

At GloverPriest, we provide friendly and transparent legal advice. If you are a first-time buyer and want to use the Mortgage Guarantee Scheme to do so, we would be happy to assist. Please don’t hesitate to speak to one of our expert lawyers today. Complete our enquiry form.