The mortgage guarantee scheme, which aims to help more buyers get on the property ladder, has been extended by 18 months.
In the full Autumn Statement document, the government announced that it will extend the scheme until the end of June 2025 “to continue helping prospective borrowers with smaller deposits buy a home”.
What is the mortgage guarantee scheme?
The government introduced the scheme in March 2021 when many higher loan-to-value (LTV) mortgages were withdrawn from the market. It was designed to encourage lending at 95% LTV so borrowers could potentially secure a mortgage with only a 5% deposit. The government gives a partial guarantee to the mortgage lender of up to 15% if the borrower defaults on their repayments.
Who is the mortgage guarantee scheme available to?
The scheme allows first-time buyers and current homeowners to purchase properties up to £600,000 with a 5% deposit. It can be used for mortgages on new build and existing homes by first-time buyers, home movers and those remortgaging. It doesn’t apply to mortgages for buy-to-let investments or purchasing a holiday or second home.
The scheme was due to end on 31 December 2023 but will now continue until 30 June 2025.