5% Deposit Mortgage Scheme in the UK for First Time Buyers and Homeowners
A 5% deposit mortgage guarantee scheme to help prospective homeowners with smaller deposits onto the property ladder was one of the highlights of the Budget announced on 3rd March 2021.
What is the 5% deposit mortgage scheme?
This scheme will start from the beginning of April and some high street lenders will be taking part in this scheme. The name and details of the lenders have not been announced yet but Santander, Lloyds and HSBC have announced that they will take part in this scheme. It will help thousands of home buyers come back from the 95% Loan to Value mortgage which disappeared last year due to the pandemic.
This scheme will not just help first time buyers but will also help home movers because it is not restricted to first time buyers. The scheme is somewhere similar to the existing Help to Buy scheme which also helped thousands of first time home buyers to get onto the property ladder. It will run alongside the Help to Buy scheme which is although similar but only available for new build homes.
Also Read: Benefitting from Prime Minister’s Mortgage Scheme for First Time Buyers
How will deposit mortgage scheme work?
According to the recent Budget announcement, this scheme will be backed by Government which means that there will be Government offering to take some of the risk associated with 95% LTV in current market to bring the scheme back to market.
Before the start of the pandemic (February 2020), there were 405 products for 95% LTV in the market which was reduced to just 5 in at the start of this month according to data from Moneyfacts. However, other deals popular with first time buyers with low deposit started to improve in recent months as after a drop of the start of the pandemic. The product with 90% LTV has helped thousands get their new home in recent months. The number of 90% LTV products climbed from 70 back in July 2020 to 248 this month. As the existing Help to Buy scheme, this scheme will also be limited to the maximum property value limit of £6,00,000, however, it will not be limited to only first time buyers.
Also Read: Buy to Let Mortgage Investment in London
Who can benefit from the scheme?
Unlike the current Help to Buy scheme, this scheme is not limited to first time home buyers, it is also available to home movers who want to sell their current home and move to a new home. It will benefit thousands of home buyers who could not afford higher deposits, especially young couples or new families. As the scheme is available for property value up to £6,00,000, thousands of properties up for sale may currently fall under this limit. As per the latest announcement made by Right move on average asking price of the property up for sale at the moment, 86% of the properties up for sale has an asking price of £6,00,000 or lower. This is a huge range for new home buyers and will benefit thousands.
If you are looking to buy your new home under this scheme, Mountview Financial Solutions has a great expertise in dealing with Residential Mortgage Applications. Mountview FS can advise on mortgage & insurance in London & Essex and can also provide the information and guide which type of mortgage is right for you. For more information, you can call us on 02080950120/07445390124 or send us your requirements at info@mountviewfs.co.uk!
