The government has helped unlock the market for those seeking to buy a house but who have only got a small deposit to put down. This is through a new scheme where the government ‘guarantees’ 95% mortgages for buyers with deposits as small as 5%.
Launched in the Spring 2021 Budget the mortgage guarantee scheme encourages banks and building societies to offer 95% mortgages to a wider range of would be homebuyers. This follows on from the withdrawal of almost all low deposit mortgages during the Covid epidemic.
This aim is delivered by the Government guaranteeing the amount of the mortgage over 80% up to a maximum of 95%. Therefore if a prospective homeowner could put down 15% the Government would guarantee 5%, if they could only put down 5% the Government would guarantee 15%.
The plan is for the scheme to run until the end of 2022 .
If you are looking for the best low deposit mortgage we are an ideal solution. Our brokers are not only experts in the market, but we have negotiated that in normal circumstances they will charge MoneyMaxim users no arrangement fees, potentially saving you up to £500.*
We have relationships with a number of specialist mortgage brokers - and will introduce you to the one we feel is best placed to you find the mortgage that will both suit you perfectly and only requires you to put down a small 5% deposit.
It is important to compare the mortgage market in this way as different lenders have many different schemes.
Interest rates and arrangement fees will differ, as will 'special offers' such as cheap or free valuations, reduced legal fees and the like.
Additionally some organisations have their own additional requirements. Barclays and Santander, for instance, will not allow new homes to be purchased under the scheme, while Santander also will not allow it to be used by the self employed.
Its also worthwhile noting that a number of other banks or building societies are offing 5% mortgages without the support of the government scheme,. Among these are the TSB and the Bank of Ireland as well as both Yorkshire Building Society and Skipton Building Society.
The Governments guarantee scheme works on homes valued at up to £600,000 on houses, £400,000 on flats. This means the maximum possible mortgage is £570,000 with a £30,000 deposit being required on such a loan.
(correct as at the time of writing, and other lenders may join)
The house you are planning to buy must be your main residence, and where you are going to live.
The loan must be a repayment mortgage (i.e. not an interest only loan).
Yes - these are allowed by the scheme as long the borrower is up to date with their current mortgage payments and the funds released are not going to be used to buy another property.
No - you will be subject to all the normal affordability tests set out by lenders, the FCA and Financial Policy Committee (FPC) in order to access a mortgage under the guarantee.
No - but possibly! No direct fee is chargeable to get a 95% mortgage backed by the Governments Mortgage Guarantee - however the interest rates and fees charged are are set by the lender. That's why its important to compare loans within the scheme and those available on the open market before you decide which best for you.
Its really easy - click the button above, pop in your details and immediately we have assessed your requirements you will be contacted by the most appropriate broker on our panel who will be able to advise you as to your best way forward.
Our service provides mortgages from the 'whole of market' meaning that rather than just one mortgage being considered for you a wide range of products with differing features, terms, rates and policies can be offered. This choice is a key benefit of our service.
Our mortgage panel for residential mortgages includes:
London & Country Mortgages Ltd. Beazer House, Lower Bristol Road, Bath, BA2 3BA who are authorised and regulated by the Financial Conduct Authority. Their FCA number is 143002.
UK Financial Consultancy Services Limited is 142-143 Parrock Street, Gravesend, Kent, DA12 1EY who are authorised and regulated by the Financial Conduct Authority. Their FCA number is 435495.
You also have the added reassurance of a MoneyMaxim consultant on hand in case of any queries or additional guidance.
This content was last reviewed on 23/04/2021