What is the new 5% deposit scheme?
The Spring 2021 budget introduced a new scheme due to be implemented from the beginning of April 2021. The 95% mortgage scheme has been put in place to help buyers with smaller deposits.
The government recognises that the pandemic has made it increasingly difficult to buy a home without a 10% deposit (or more) as mortgage lenders have not been offering low deposit mortgages. This new scheme will help those with only a 5% deposit to get onto the property ladder. It could give a massive boost to people who are currently renting and finding it difficult to save due to the rent they are paying.
How does the 95% mortgage work?
The Government is incentivising lenders to provide 95% mortgages to those who can afford the repayments, but don’t necessarily have the starting deposit they need. This means you won’t lose out on the house you’ve fallen in love with whilst trying to save at least a 10% deposit!
Who can use the 5% deposit scheme?
Anyone can use the scheme (subject to you being able to satisfy a lender that you can afford the repayments). Whether you’re a first-time buyer or looking at upsizing from your existing home, this scheme is available on properties up to the value of £600,000.
Can I get a 95% mortgage?
When it comes to deciding how much a bank or building society is prepared to lend you, they will take into account your income, your outgoings and your credit rating. You can find out more about this in our preparing for your first home guide.
What does LTV mean?
A 95% mortgage enables you to borrow up to 95% of the purchase price of the property you wish to buy. The remaining 5% is your deposit. You may hear this called a ‘95% LTV mortgage’ with LTV meaning ‘loan to value’ and another way of saying the mortgage is for 95% of the property’s agreed purchase price.
For more information on the Mortgage Guarantee Scheme and how we can help to get you moving, arrange an appointment with one of our friendly sales advisors.
*Please note your home may be repossessed if you do not keep up repayments on any loan secured on it.