While announced during the March 2021 Budget, the new 95% mortgage guarantee scheme is now live across the country.

The scheme assists buyers to purchase property valued up to £600,000 with a 5% deposit. The scheme is available to all buyers, not just first-time buyers. Therefore, existing homeowners looking to move can capitalise on this scheme.

The scheme is also available for all property types, so buyers are not restricted to looking at new-build properties.

Lenders who are participating in the scheme include:

  • HSBC
  • Barclays
  • Santander
  • NatWest
  • Lloyds

There are other mortgages that may be of interest to you, including the help-to-buy Mortgage scheme if you are looking to purchase with a 5% deposit.

You may be thinking of a shared ownership scheme and may have limited funds so a 95% mortgage may be even more achievable for your budget.

The scheme aims to incentivise lenders, helping buyers

95% Mortgage

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Robert Jenrick, Housing Secretary, comments: “For too many people, no matter how hard they work, homeownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot. That’s why we are determined to do everything we can to help hard-working families and prospective first-time buyers get their feet on the housing ladder in an easy and affordable way, to level up this country.”

The Housing Secretary continued by saying; “The new mortgage guarantee scheme which comes into effect today will give providers the confidence to lend and help families and young people get on the property ladder without the prohibitive burden of a large deposit. Despite the challenges faced over the past year, the government has intervened to protect jobs, and support builders and buyers to help keep the housing market healthy. Today’s 95% mortgages launch further strengthens our commitment to building back better from the pandemic.”

The Housing Secretary concluded by saying; “In recent years we’ve reversed the trend and seen a positive increase in owner-occupiers. We’re determined to build on this through the range of flexible ownership options which help ensure homeownership is achievable. We want to match the ambitions of aspiring homeowners up and down the country. Together we can turn ‘Generation Rent’ into ‘Generation Buy’.”

Leading property portals have their say

Tim Bannister, Rightmove’s director of property data, says: “The new mortgage scheme could help some first-time buyers bring their plans forward if they have a lower deposit but are still able to pass the affordability checks, and will be welcomed by those who last year we’re struggling to come up with a 15 or 20% deposit. Although the number of new properties coming to the market is improving, it’s still nowhere near enough to satisfy the buyer demand that is already at record levels, so more people choosing to trade up will be vital to open up more choices at the start of the property ladder.”

Tim Bannister concluded by saying; “The combination of not enough stock and high demand will help underpin prices, and over the past five years asking prices of a typical first-time buyer home has already increased by £23,000 on average, so those who can now afford to buy a home will be trying to make the move quickly in case prices rise further.”

Richard Donnell, director of research and insight at Zoopla, adds: “Supporting buyers with small deposits is key to widening access to homeownership for a part of the mortgage market that has been under-served. It is not a mass-market solution and it’s vital we have a competitive market for lending up to 90% LTV for a healthy housing market. Greater availability of 95% mortgages will have the greatest benefits for buyers in lower value housing markets in northern England and Scotland where a 95% mortgage is more attainable.”

Richard concluded by saying; “The scheme will have less impact on buyers in southern England where high house prices are a major barrier to being able to afford a 95% mortgage. This aligns with the levelling up narrative and policy approach of the government.”

How to explore your mortgage options with The Money Hub

Call the Money Hub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Mortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.

DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.