Ultimate Guide of Mortgage Guarantee Scheme
This government-backed mortgage guarantee scheme aims to support first time buyers with a 5% down payment in purchasing a home. Know about the 95 percent mortgage guarantee or how to find lenders who provide it.
The Basics of New Mortgage Guarantee Scheme:
- From April 19, 2021, you will be able to get a mortgage with just a 5% deposit. The 95% mortgage scheme should last 18 months, till December 2022.
- When the pandemic hit, 95% of mortgages were practically gone. Lenders will be approved to lend again, and the government will provide a guarantee.
- The Mortgage guarantee scheme includes all types of houses (new and old) with a price of less than £600,000.
- First time home buyers and current homeowners are eligible to apply.
- If you choose, you can lock in your initial rate for five years.
- You must have a steady income, a good credit score, and show that you can pay the monthly mortgage payments.
What is the procedure for applying for a mortgage guarantee?
Once you’ve identified a home you want to buy, you’ll need to find a mortgage from one of the participating lenders to apply for the mortgage guarantee. Again, a good mortgage broker like Mountview Financial Solutions can help you through your options and help you find the best price.
Also Read: What You Need to Do for Buying a Second Home
Is getting a mortgage with a mortgage guarantee the best option?
Maybe not. The guarantee will help increase the number of 95 percent mortgages, which had nearly disappeared from the market when the pandemic struck. As a lender, it makes no difference whether the government’s mortgage guarantees a deal or not; instead, the mortgage interest rate, terms, and any housing costs will act as your look at the best deal with the deposit you have. It’s important to mention that if you get to a 10% deposit, the rates are significantly less. There are more products available.
What is the duration of the mortgage guarantee scheme?
According to the plan, the strategy resolution runs for 18 months, from April 2021 to December 2022. If you’re interested, though, you’ll want to keep an eye on things. In some parts of the country, the housing supply is extremely limited, and this increased demand may drive up house prices, making it even more difficult for you to get on the property ladder.
Not Quite Ready to Buy – What Steps You Can Take to Save to Buy:
It’s always a good idea to save as much profit as possible before buying a home, as this reduces the amount you’ll have to pay it back in the long run and gives you a much wider range of cheaper mortgage products in the short future. Here are a few things you may do to put yourself in a position to buy:
- You’ll need to figure out how soon you can manage to buy and how much money you’ll save in going to purchase your first home. See our suggestions on saving for your investment, which will help you create your budget and increase your savings.
- Getting your credit in order is important to reach a mortgage. Know how to improve your credit score before getting a mortgage.