Mortgage Guarantee Scheme

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Government Mortgage Guarantee Scheme

The background – The COVID-19 pandemic has led to a reduction in the availability of high loan-to-value (LTV) mortgage products, particularly for prospective homebuyers with only a 5% deposit. This has left many hard-working households unable to get on to the housing ladder. The number of 95% mortgage schemes available fell to virtually zero between March 2020 and present day and the ‘squeeze’ has filtered down to impact 90% mortgages too. At one point the majority of High Street lenders were not lending above 85%.

The good news is that the market has improved and the availability of 90% has returned (albeit at rates higher than a year ago, despite the Bank Base Rate reductions in March 2021). The rates on offer have been improving with increased competition and the improved appetite to lend already. This was before the proposed government mortgage guarantee scheme was even announced.

To help further, in the recent Budget, the government announced the new mortgage guarantee scheme to support a new generation in realising the dream of home ownership. This will enable more households to access mortgages on both new build and existing homes, without the need for prohibitively large deposits. It helps all buyers i.e. First Time Buyers as well Home Movers (those moving up market) and remortgagers too.

Mortgage Guarantee Scheme 2021

The mortgage guarantee scheme 2021 (some have referred to it as a home loan guarantee scheme) is designed to increase the appetite of mortgage lenders for high loan-to-value lending to creditworthy customers. It will provide lenders with the option to purchase a government guarantee that compensates them for a portion of their losses in the event of foreclosure.

Many lenders have signed up for the scheme due to start in April 2021, a couple of lenders have already started to offer 95% mortgages outside the scheme too!

The new scheme looks to help move the housing market forward, helping all buyers to get a mortgage at a higher loan to value (lower deposit).

I hope that the impetus this provides means that with increased activity and confidence, the competition will return to the market (between lenders) and interest rates on offer reduce closer to pre Covid 19 levels too.

At the point of writing, information regarding rates and criteria are yet to be released but we should know these any day so if you have any questions regarding The Government Mortgage Guarantee Scheme or 95% mortgages generally (or any other aspect of the home buying process) then contact us today for further information.


correct at writing 29th March 2021

Beds 01525 877650 or Herts/Bucks 01442 252040 or Mobile 07710 770969


Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage.

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