The new government’s mortgage guarantee scheme makes it easier for first-time buyers to buy a home. If you want to get on the housing ladder, you can now secure a mortgage with a 5% deposit. However, getting a mortgage for the first time can be challenging. At Matrix Financial, our trusted mortgage advisers, who are based in Cambridge, are here to help you—no matter where you live in the country. With our advice and expertise, we can help make the prospect of owning a home a reality for you.
Please read on to find out more about the new scheme to help first-time buyers qualify for a mortgage.
What is the 95% Mortgage Guarantee Scheme?
The mortgage guarantee scheme means that house buyers only need a 5% deposit to buy a house. The 95% mortgage scheme applies to all types of properties—new build and old—up to £600,000. The government-backed program runs from April 2021 until December 2022.
To boost the housing market, the government announced a 95% mortgage guarantee scheme. Due to the coronavirus pandemic, 95% mortgages disappeared, but the desire to own a home increased. Because the government guarantees part of the mortgage, banks are more willing to lend money.
The Mortgage Guarantee Scheme for First-Time Buyers and Home Owners
The 95% mortgage guarantee scheme is available if you are buying a house for the first time or are moving home. However, to be eligible for the mortgage, there are a few extra caveats to consider.
First, the mortgage with a 5% deposit is only available if you plan to live in the purchased property. It is not possible to use it to buy a second home or a buy-to-let property. Second, the mortgage must be for a “repayment” mortgage, not an interest-only one. Third, to qualify, the mortgage must be for between 91% and 95% of the property’s value.
The usual conditions apply to the mortgage, such as having a regular income, a good credit rating, and affording the mortgage repayments.
Where to Find 95% Mortgages
Most of the big high-street lenders offer mortgages with a 5% deposit. Our mortgage advisers will help you review the marketplace and guide you to the best option for your circumstances.
The Best Mortgages to Buy a Home
Keep in mind that, depending on your circumstances, the mortgage guarantee scheme may not be the best option for you. There are other affordable ways to buy a home.
For example, it may be best to save more for a deposit. Lenders can offer an 85% or 90% mortgage, and this way, you will get better interest rates. Also, interest rates may drop when more home buyers take advantage of the 95% mortgage scheme. So, it could be worth waiting for a time before getting a mortgage.
Another way to buy a home with a small deposit is the Help to Buy scheme. This scheme is available for first-time buyers who purchase a newly built home. All you need is a 5% deposit, and the government gives a 20% equity loan. You then have to find a mortgage for 75% of the property’s value.
Contact Our Mortgage Advisers
Finding the best mortgage to help you buy your first home or move home requires getting the best advice. We provide mortgage advice to first-time buyers and existing homeowners in Cambridge, Bedford, Bury St Edmonds, Huntingdon, Saffron Walden, and across the country.
Call us on 01223 365340 or 07773 793349 today to speak to a team of trusted mortgage advisers and find the best advice on a suitable mortgage. Alternatively, you can click on the mortgage enquiry form to get in touch.
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