During the Spring Budget, Chancellor Rishi Sunak stated that the Government is introducing a mortgage guarantee scheme to help first time buyers and existing homeowners.
For many, it may not be easy to save for a 15% or 20% deposit for a home and this is where the new scheme will be beneficial to those looking to buy their first or next property.
How does the scheme work?
The new scheme will begin in April and both first time buyers and existing homeowners will be able to purchase homes worth up to £600,000 with a deposit of just 5% – enabling the majority of homebuyers to be eligible for the scheme.
Data from property portal, Rightmove, has revealed that 86% of properties currently listed for sale on their site have an asking price of £600,000 or less.
For the scheme to work, the Government will compensate lenders for some of their losses should a buyer default on their mortgage repayments for any reason. In return for this guarantee, lenders provide mortgages worth up to 95% of a home’s valuation or purchase price, so that borrowers can proceed with a deposit of 5%.
As many 95% of mortgages have been unavailable over the past year, the new scheme could be a real game changer, particularly for first time buyers.
Is the scheme only for first time buyers?
The Government has confirmed that the mortgage scheme will be open to all buyers, providing the home you’re buying is worth less than £600,000. Whether you are a first time buyer or looking for your next property, you can benefit from this new scheme.
How to apply for a 95% mortgage under the scheme.
Some of the nation’s biggest banks have committed to the scheme, the usual mortgage affordability checks will still apply.
First time buyers and existing homeowners will need to prove to their lender that they can comfortably afford the monthly repayments after other essential spending has been covered.
If you or someone you know might be able to benefit from this scheme, fill in the form at the bottom of this article and get in touch. We are here to answer any questions you may have.