The Government Guaranteed, 5% Mortgage Deposit Scheme Has Launched

Local property expert Andrew Cardwell, the managing director of award-winning Cardwell’s estate agents, shares some of the latest property news…

Hello and welcome to another brief column regarding the latest news from the Bury property market.
Firstly I hope you and those you love are staying safe and well as we progress through the Covid-19 pandemic and the restrictions continue to ease. From a personal point of view it has been lovely to meet with members of my extended family for the first time in more than a year, and I hope that you too have enjoyed the easing of some of the restrictions, be it going out for a meal or getting back to the gym etc.

Regarding the property market, the big news is that High Street lenders are now offering mortgages with just a 5% deposit required. This is a huge change to previous years where requirements have previously been much higher. This is a new government guaranteed scheme that launched towards the end of April 2021. The policy, which was announced in the Spring Budget, is designed primarily to help more first-time buyers secure a home purchase. It aims to make the dream of homeownership a little closer to a reality for a number of buyers by reducing the amount required as a deposit.

As well as offering support to those buying a home for the first time, the 5% deposit mortgage deposit scheme isn’t restricted to just first time buyers as anyone looking to buy a home up to £600k can apply, unless they are buying a second home or a buy-to-let investment property.

The government is offering a partial guarantee to the lenders, approximately 15%, to compensate lenders if the borrower defaults on repayments, which is designed to give lenders the confidence to offer the 95% Loan To Value mortgages. So far, Lloyds, Santander, Barclays, HSBC and Natwest are starting to offer the products, with more lenders following suit soon.

Chancellor Rishi Sunak said: “Every new homeowner and mover supports jobs right across the housing sector, but saving for a big enough deposit can be hard, especially for first-time buyers.

“By giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, boosting the sector, creating new jobs and helping people achieve their dream of owning their own home.”

It is worth remembering that lenders will still carry out affordability checks and a home can be at risk if payments are not maintained. If you would like any more information on the 5% deposit mortgages available, or if you are thinking of selling or renting out a property please call us on 0161 761 1215 or pop in and see us in our town centre office on Market Street.

Andrew Cardwell

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