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Introduction of the Government’s 95% Mortgage Guarantee Scheme
In the Spring 2021 Budget, the Chancellor announced various changes to the housing industry including the introduction of government guaranteed 95% mortgages. The aim is to support home ownership and make mortgages more accessible to buyers struggling to meet increasingly strict criteria from lenders. Currently the majority of lenders will accept no less than a 10% deposit with a number requesting 15% or more.
The new scheme will begin in April 2021 after the current Help to Buy scheme comes to an end. It will be available to anyone purchasing a property for £600,000 or less excluding Buy to Let investments and second homes. Buyers will still be required to meet the affordability requirements but a number of large lenders including Barclays, HSBC, Santander and Natwest have agreed to provide these mortgages. It means that the government guarantee that in the event the borrower is unable to meet their mortgage repayments or the property price falls and is worth less than the outstanding mortgage, the government guarantee it and cover these risks.
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