Apr 19, 2021

Mortgage Guarantee Scheme

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On 19 April 2021 the new government backed mortgage scheme was launched.

What is the Mortgage Guarantee Scheme?

The scheme is designed to help buyers with a 5% deposit buy a home and is open to all home buyers, not just first time buyers.  The scheme will help provide an affordable route to home ownership for aspiring home-owners.

According to Moneyfacts.co.uk the launch of the scheme has already seen a significant rise in mortgage deals available for those with a 5% deposit.

What are the criteria for the Mortgage Guarantee Scheme?

We understand that the criteria for the Mortgage Guarantee Scheme are as follows:

  • The scheme runs from 19th April 2021 until December 2022 (18 months)
  • The scheme allows you to get a mortgage with a 5% deposit.
  • Open to first time buyers and existing homeowners.
  • Available for property in the UK with a value of no more than £600,000.
  • Available for residential mortgages i.e. not a second home orf buy-to-let property.
  • The mortgage is to be taken out by an individual(s), not a business
  • Repayment mortgage only using the scheme, no interest only options.
  • You will require a regular income, good credit rating and show you can afford the monthly mortgage repayments.

Which lenders offer the Mortgage Guarantee Scheme

According to the Government press release on the 19th April 2021 the scheme is already available across the country, with Lloyds, Santander, Barclays, HSBC and Natwest with Virgin Money following soon.

However, we would always recommend that you speak to an independent mortgage advisor that will be able to compare the best mortgage rates on your behalf.

What other home ownership options are available?

The Mortgage Guarantee Scheme is one of a range of flexible home ownership options available.  These include Help to Buy, Shared Ownership and the First Homes Scheme.

How is the mortgage guarantee scheme different from the Help to Buy:  Loan Equity Scheme?

The mortgage guarantee scheme was set up to support households who cannot get a mortgage because of the reduced 95% Loan-To-Value products as a result of the COVID-19 pandemic.  It also helps existing homeowners who are looking to move and require a 95% Loan-To-Value mortgage and is available across the UK on properties with a purchase price of £600,000 or less.

The Help to Buy:  Equity Loan scheme is available to those who aspire to own a new build home, but struggle to afford the repayments on a low deposit mortgage.  Under this scheme the government provides an equity loan for up to 20 per cent of the value of a new build home, interest free for the first 5 years.  The equity loan must be paid back to the government on sale, or when the mortgage is repaid.

How do I find out more

If you wish to find out whether you can benefit from the Mortgage Guarantee Scheme then please contact your LOCAL Michael Tuck Estate Agents branch and we will put you in touch with an independent mortgage advisor.

Correct at date of publication.

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