For anyone who’s found it challenging to save for a 15% or 20% deposit over the past year or so, we’ve got some good news to share.
Chancellor Rishi Sunak announced in the Spring Budget that the government is introducing a mortgage guarantee scheme to help first-time buyers and existing homeowners.
Under the new scheme, which will launch in April, first-time buyers and existing homeowners will be able to purchase homes worth up to £600,000 with a deposit of just 5%.
The way the scheme works is that the government pledges to repay lenders some of their losses if you as the buyer default on your mortgage repayments for any reason.
In return for this guarantee, lenders have to sell mortgages worth up to 95% of a home’s price – so that you as the borrower can proceed with a deposit of 5%.
It’s a potential game-changer for many first-time buyers as lots of 95% mortgages were made unavailable during the past year.