Chancellor Rishi Sunak, in his recent budget, unveiled plans for the new UK Government Mortgage Guarantee Scheme. But what is the scheme and how will it impact future buyers?
Scheme background:
- The scheme aims to increase the amount of lenders providing high LTV (loan-to-value) mortgages to consumers. The scheme offers lenders the option to utilise a government guarantee that compensates them for a portion of their losses in the event of repossession.
- The guarantee will be available on properties costing up to £600,000 and the government’s liability will be limited to £3.9 billion.
- The scheme can be used on new homes as well as those on the open market. Buyers can fix their initial mortgage rate for at least five years.
When and where will it be available?
- The new scheme launches April 2021 and will run to the end of 2022. It will be available across all parts of the United Kingdom.
Will all lenders use the guarantee?
- So far HSBC, Santander, Lloyds, Barclays, NatWest and Barclays have announced that they will be offering 95% mortgages from April. Watch this space for additional information with others likely to follow suit soon.
Is there any specific terms and conditions you need to be aware of?
To qualify for the scheme, a mortgage must be :
- Used for a residential purchase (it cannot be used to fund a buy-to-let property)
- Secured by an individual(s) rather than a company
- Be used to buy a home which is valued at less than £600,000
- Have a LTV between 91% & 95%
- Originated between the scheme dates listed
- Not be an interest-only mortgage
Buyers will remain subject to normal mortgage-related checks (such as credit score tests and affordability checks).
It is important to take advice as mortgage availability and access to rates will be different depending on your individual circumstances. To discuss your options please call 0800 652 6649 or email [email protected]