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What is the Mortgage Guarantee Scheme?

The Mortgage Guarantee Scheme ‘officially’ launched this week to help those who want to buy a home with a 5% deposit. It was announced by the government to encourage lenders to re-introduce 95% Loan to Value (LTV) mortgages, as most were withdrawn at the beginning of the pandemic.

Under the terms of the scheme, the government will guarantee a portion of the mortgage over 80%. With a 95% LTV mortgage, this means that the government will effectively cover 15% of the value of the loan should a homeowner default.

The scheme is similar to the Help to Buy mortgage guarantee scheme, which ran for three years from 2013.

Who is eligible ?

Both first-time buyers and home movers are eligible for the mortgage guarantee scheme. The mortgage must be used for buying a residential property, which you will live in as your primary residence. You cannot buy second homes or buy-to-let properties using the scheme.

Existing properties and new-build homes up to £600,000 in value are eligible.

You can only apply for a repayment mortgage as interest-only loans are exempt. As with any mortgage, you will have to pass standard checks. These will include credit score assessments and affordability checks.

To be eligible, the mortgage you are applying for needs to be between 91% and 95% of the value of the property you want to buy.

Although the deadline for the scheme is 31 December 2022, the government is reviewing it before then.

What mortgage rates are available?

As ever, the mortgage rates offered depend on the lender and the timescale of the fixed-rate. There is also individual lender criteria to take into consideration. This is why when buying a property, we advise using a mortgage broker.

Mortgage brokers can access deals that lenders do not necessarily offer individuals. Brokers are also best placed to understand the intricacies of deals and the house buying process.

At Co-Navigate, we are more than happy to help discuss options in more detail. So, if you would like more information about the scheme and/or your eligibility, then please do not hesitate to contact us today.

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