During the 2021 Budget, the Chancellor announced a Mortgage Guarantee Scheme, which will help people with small deposits get on the property ladder. The scheme will increase the availability of 95% Loan-to-Value mortgages, which will allow more aspiring homebuyers to access mortgages without the need for exceptionally large deposits.
Set to launch in April 2021, the scheme will allow lenders to purchase a government guarantee that compensates them for a portion of their losses should the homeowner fail to pay their mortgage.
To be eligible for a guarantee, you will need to:
- Be a residential mortgage (not second homes) and not buy-to-let
- Be taken out by an individual(s) rather than an incorporated company
- Be on a property in the UK valued at £600,000 or less
- Have a loan-to-value of between 91% and 95%
- Be a repayment mortgage (not interest-only)
- Meet standard requirements
Lenders will need to pay the government a commercial fee for each mortgage in the scheme and will be set so the scheme is self-financing.
The scheme will be open for new mortgage applications from April 2021 to December 2022. We will provide more information on the Mortgage Guarantee Scheme as it arises.
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