A new government-backed mortgage scheme to help people with 5% deposits get on to the housing ladder is available to lenders from today.
First announced at the Budget, the scheme will help first time buyers or current homeowners secure a mortgage with just a 5% deposit to buy a house of up to £600,000 – providing an affordable route to home ownership for aspiring home-owners.
The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.
The scheme is now available from lenders on high streets across the country, with Lloyds, Santander, Barclays, HSBC and NatWest launching mortgages under the scheme today and Virgin Money following next month.
The government has made clear its commitment to tackling inequality in the housing market and levelling up the country. Official statistics show more homes were delivered in 2020 than in any year since 1987. In 2019, a pledge to build 300,000 new homes a year was announced with an investment of over £12 billion in affordable housing over the next 5 years – the largest investment in a decade.
Since 2010, more than 687,000 households have been helped into home ownership through government schemes, but when asked, 69% of private renters and 63% of those living at home who had looked into a mortgage said they cannot find many mortgages with a low deposit.
Part of the government’s Plan for Jobs, the scheme promises to help to support the housing market and protect jobs and businesses across the housing supply chain, from housebuilders and estate agents, to tradespeople, DIY stores and removal firms.
It is worth noting that the launch comes as average house prices in the UK continue to rise to record levels.
Speaking about the launch, which the government hope will turn ‘Generation Rent’ into ‘Generation Buy’, Chancellor of the Exchequer, 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.”
The scheme is one of a range of flexible home ownership options available, which includes Help to Buy, Shared Ownership and the First Homes Scheme.
