The Government has recently announced a new mortgage guarantee scheme aimed at improving access to homeownership. In this article, we’ll explain how the scheme works, who can benefit, and what its introduction could mean for the UK property market.
What is the Mortgage Guarantee Scheme?
The mortgage guarantee scheme is a government-backed initiative designed to encourage lenders to offer higher loan-to-value (LTV) mortgages. Specifically, it supports mortgages worth between 91% and 95% of a property’s value. This allows buyers who can only manage a 5% deposit to access mortgage deals that would otherwise be unavailable.
Typically, many lenders cap their mortgage offers at 90% LTV, making it difficult for buyers without a sizeable deposit to get onto the property ladder. Under the scheme, the Government guarantees a portion of the mortgage, reducing the lender’s risk if the borrower defaults.
While borrowers remain responsible for making repayments, the scheme offers lenders greater security. It’s similar to a temporary version introduced in 2021, which ran until June 2025, but the new version is permanent.
How the Scheme Works
The new mortgage guarantee scheme is open to both first-time buyers and home movers across the UK. It applies only to those purchasing their main residence and does not include second homes or buy-to-let properties.
Importantly, there is no price cap on the properties eligible under the scheme. However, borrowers must meet the lender’s standard criteria, including income and credit checks. Not all lenders will participate, so buyers will need to check whether their chosen provider is part of the scheme.
Buyers apply in the usual way, directly with a participating mortgage provider. The lender then handles the necessary administration to access the Government guarantee. While the scheme can open doors for some buyers, it won’t be suitable for everyone, so independent financial advice is essential.
What Impact Will it Have on the Property Market?
While the number of people who benefit from the mortgage guarantee scheme may be relatively modest, the broader effect on the housing market could be more significant. For context, the previous scheme helped around 53,000 people over four years.
By increasing the availability of low-deposit mortgages, more first-time buyers could enter the market. This in turn can help unlock stalled housing chains, as more second and third steppers are able to sell their homes and move on. In essence, the scheme has the potential to boost housing market activity, helping not just buyers, but also sellers across the board.
What This Means for You
Whether you’re buying or selling, it’s worth understanding how the mortgage guarantee scheme may influence your next move. It may increase demand for certain types of property and improve your chances of finding the right buyer.
If you’re considering a move, we’re here to help. Contact us for an expert property valuation and tailored marketing advice. And if you’re planning to buy, explore the latest listings we have available.
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