The Coronavirus (COVID-19) pandemic led to the virtual disappearance of mortgages that only required a 5% deposit. But the Chancellor, Rishi Sunak, announced on 3 March 2021 a new initiative during his Budget 2021 speech. It’s being referred to as the Government-backed 95% mortgage guarantee scheme

The government-backed mortgage guarantee scheme is open to first-time buyers and home movers across the UK and is aimed at encouraging banks and building societies to offer 95% loan-to- value (LTV) mortgages again.

The announcement is tremendous news for first-time buyers looking to get on the property ladder at a time when, for many, owning a home may seem an impossible dream as they would otherwise not be able to find a large deposit to secure a mortgage deal.


The announcement aims to stimulate the housing market and get more people onto the housing ladder. The Chancellor said there was good evidence that ‘this will help those that are getting on the housing ladder disproportionately to other home movers.’

He said: ‘We know from the previous time we did it, it helped 100,000 people buy a home and the average value of a home bought under the scheme was £160,000, compared to the average price of a home which at that time was more like £225,000.

‘And 80% were first-time buyers, so it feels like it is a policy that is quite well targeted to help people get on the housing ladder.’


The government introduced the scheme for new mortgage applications which commenced from April and provides a guarantee to lenders across the UK that offer mortgages to people with a deposit of five per cent on homes with a value of up to £600,000.

This scheme is for any ‘creditworthy’ household struggling to save for a higher deposit. These will be standard residential mortgages – so no second homes or buy- to-lets.

If the borrower gets into financial difficulty and their property is repossessed, the government will cover that element of the lender’s losses. The scheme opened for new mortgage applications from April and will be open to new applications until December 2022.

Several of the country’s largest lenders, including Lloyds, NatWest, Santander, Barclays and HSBC, are offering these 95% mortgages, with others to follow shortly after. The mortgages must be on a repayment basis, not interest-only. And borrowers will need to be credit checked and meet the standard rules on affordability.

All lenders under the scheme will also offer mortgages fixed for at least five years, providing options for buyers with smaller deposits who want the security and predictability of a mortgage with a fixed rate over a longer term.

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Eligible mortgages guaranteed under the scheme will need to:

  • be a residential mortgage (not second homes) and not buy-to-let
  • be taken out by an individual or individuals rather than an incorporated company
  • be on a property in the UK with purchase value of £600,000 or less
  • have a loan-to-value (LTV) of between 91% and 95% of the value of the property • be originated between the dates specified by the scheme
  • be a repayment mortgage and not interest-only
  • meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage, for example, a loan- to-income and credit score test


Thanks to soaring house prices and tighter rules on mortgage approvals, the first rung of that famous property ladder can be very hard to reach. So the new government backed mortgage guarantee scheme will be a lifeline for those first-time buyers trying to get on the housing ladder.

Are you ready to buy a property? You’ve dreamed of owning a home for as long as you can remember, or maybe you’re looking to move to another property. Now the new government-backed mortgage guarantee scheme could make it a reality. To discuss your options and get an estimate on how much you can borrow, maybe getting a Decision In Principle to help you know the amount you could borrow, why not book a no obligation discussion with a member of our team. We do not charge you a broker fee and so it’s in our best interest to help you obtain the most suitable mortgage for your needs and personal situation.

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We need to be honest with you… Your home may be repossessed if you do not keep up repayments on your mortgage.