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Government Launch 95% Mortgage Guarantee Scheme

A new raft of 95% loan-to-value mortgage products are being introduced to the market that are backed by the Government’s new mortgage guarantee scheme. Prospective homeowners – particularly those looking to take their first step on the home ownership ladder, will be able to access 95% loan-to-value mortgage products guaranteed by the government.

Chancellor Rishi Sunak unveiled the new 95% scheme last month (early March) in his Budget speech. It is intended to boost the property market in the aftermath of the Covid pandemic by reducing the amount of deposit needed to secure a property. It will also increase competition among lenders. By taking on the financial risk of the higher loan-to-value mortgages, the Government want to give lenders confidence to relaunch their 95% deals which were mainly scrapped last year at the onset of the global Corona pandemic.

The scheme launched on 19th April is aimed at both first-time buyers and current homeowners who wish to purchase properties valued at up to £600,000 – with just a 5% deposit. Many of the UK’s largest banks including HSBC, NatWest, Barclays, Lloyds and Santander are offering the new mortgages – guaranteed by the Government – with other lenders expected to offer their own products in the following weeks.

Chancellor Sunak said the Government intends to fully support the housing market on the back of the Covid crisis and by guaranteeing the new 5% deposit mortgages, it is hoped more people will be able to take their first step on the housing ladder and become homeowners.

Boost for homeowners

Mortgage products delivered under the new 95% scheme will:

  • Be as simple as possible for lenders to administer
  • Be introduced as rapidly as possible
  • Focus on helping borrowers
  • Ensure lending remains affordable and will not incentivise irresponsible lending

Henry Knight, Managing Director of Springtide Capital, said the move was a fabulous initiative to allow people to access mortgages who may not have been able to do so before.

“The Government’s guarantee scheme will enable lenders to offer higher loan-to-value rate mortgage products. This will allow new homeowners to access the market which is vital to ensure the British housing market remains robust – especially following on from the impact of the Covid pandemic.

“Existing homeowners who are struggling to remortgage or move due to low levels of equity in their property will be able to access more competitive offers. The scheme will generate far more movement in the marketplace which is brilliant news.”

95% loan-to-value mortgage criteria

A mortgage being offered under the scheme must meet certain criteria:

  • Only residential mortgages are applicable – not second homes or buy-to-lets
  • The mortgage must be taken out by individuals, not an incorporated company
  • The property must be in the UK and have a purchase value of £600,000 or less
  • It can only be a repayment mortgage, not interest only
  • The mortgage can have a loan-to-value ratio of between 91% and 95%
  • Any lender taking part in the Government’s scheme must offer a five year fixed rate product to give borrowers the security of making predictable repayments.

Commitment to the housing market

The new scheme has been hailed as the next step in the Government’s pledge to support homeownership. Other initiatives introduced include:

  • A temporary cut to the Stamp Duty Land Tax to encourage confidence in the property market. Properties valued at under £500,000 are exempt from stamp duty until June 30th.
  • First time buyers are eligible to access the Lifetime ISA (LISA), a long-term savings product intended to support younger people saving for their first home, or for later life.

With new mortgage products becoming available all the time, speak to one of our advisers today to discover the right option for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.


Budget: Sunak confirms 95% LTV mortgage guarantee scheme | Financial Reporter

Rishi Sunak tries to support the housing market –

Stamp Duty Land Tax: Residential property rates – GOV.UK (

We can help you decide the best option for you. Get in touch on 020 8154 7280.