What you need to know about the new 95% mortgage guarantee scheme
A new mortgage guarantee scheme was announced this spring, with the goal of helping first-time buyers and aspiring home movers purchase a home with a smaller deposit.
The initiative, which will be available for new mortgages up to 31st December 2022, is intended to increase the availability of mortgages on new or existing properties for those with small deposits.
This follows a plummet in the availability of 95% mortgages last year, as lenders lost confidence in the UK’s financial stability during the pandemic.
How will 95% mortgages work?
They are based on the Help to Buy mortgage guarantee scheme, that ran from October 2013 to December 2016; this backed mortgages for 104,736 purchases – 2.7% of all those in the UK.
The average property bought through the scheme was worth £159,170, compared to an average UK house price of £223,000.
In terms of restrictions with the latest initiative, only first-time buyers or those moving homes are eligible to apply, not those wishing to buy second homes or buy-to-let properties.
First-time buyers and home-movers form a vital cog in the economy and housing market. Therefore, the government believe their support will play a crucial role in restoring the balance.
However, 95% mortgages may not be suitable for everyone, even if eligible. That said, for some people they represent a great opportunity to get onto the housing ladder, or plan a forward move, especially those wanting to utilise a small deposit. As an example, a property purchased at £250,000 would only require a deposit of £12,500.
Borrowers will need to meet certain lending criteria, which can differ from lender to lender. Advice from an independent mortgage advisor is a great way to compare the market offerings, and also discuss other financial or legal requirements you may need to consider.
For assistance with your mortgage needs, or to discover how the scheme could help you purchase your dream home, get in touch today. Or simply start by browsing our latest properties to see what’s available in your area.
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Our work doesn’t stop after your mortgage is completed, we’re here for ongoing advice and of course, will contact you when your mortgage product is up for renewal.
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