The mortgage guarantee scheme enables buyers to get a home with just a 5% deposit and has helped 53,000 home buyers get on the ladder
A mortgage scheme helping first-time buyers with small deposits is set to end in WEEKS. The mortgage guarantee scheme enables buyers to get a home with just a 5% deposit and has helped 53,000 home buyers get on the ladder,
It can be used to buy any type of home as long as you don’t pay more than £600,000 for it. It’s been available for buyers since April 2021 but it’s scheduled to end on June 30.
The Labour Party government said in February it would launch a “new, permanent, comprehensive mortgage guarantee scheme” that would “open the door to home ownership for more young families and hard-working renters”.
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Justin Moy, managing director at EHF Mortgages, said: “This was originally designed to help lenders stretch to 90-95% Loan to Value at a time when confidence within the market was low, so this looks to be a positive step without causing too many ripples with lenders.”
Pete Mugleston, mortgage adviser and managing director at Online Mortgage Advisor, said losing the scheme would be “mixed news” for first-time buyers.
“On the one hand, the mortgage guarantee scheme was a useful way of helping first-time buyers get on the property ladder if they didn’t have a large deposit,” he said.
“But, given that a lot of lenders are now offering mortgages with a 5% deposit and lower, losing it isn’t as big an issue as it could have been.
“As the government has not given any further details about the scheme it promised in February, we could be waiting a while before we hear anything.”
Zoopla’s executive director for research Richard Donnell previously said the permanent scheme may help just 5% of first-time buyers a year.
Holly Tomlinson, financial planner at Quilter, told The Sun: “The lack of take up of the current 95% mortgage guarantee scheme shows that making it permanent under Labour’s proposed ‘Freedom to Buy’ scheme will do little to help those struggling to take their first step onto the property ladder.
“Instead, the government should look to improve upon the schemes currently on offer.”
