A new government-backed mortgage scheme to help people with 5% deposits get on to the housing ladder is available to lenders from 19th April 2021. 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 scheme is one of a range of flexible home ownership options available. These include Help to Buy, Shared Ownership and the First Homes Scheme. Figures show that the number of mortgage approvals for house purchases in January 2021 was 99,000 – a 40% increase on January 2020.
Part of the government’s Plan for Jobs, the scheme will 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.
The intervention comes as new figures published by the government show a greatly increased desire for homeownership and a sharp reduction in 95% mortgage availability over the past year.
The figures show that more than two-thirds of private renters (68%) and those living at home (72%) want to buy, with the majority saying the pandemic has made them more aware of the importance and benefits of home ownership.
The survey also found that 76% of private renters and 70% of those living at home have started saving for a deposit or put more money into their savings during the pandemic.
Other government home ownership options available include:
95% Mortgages: From today (19 April) first-time buyers will be able to purchase a home with only a 5% deposit. The scheme will help to increase the supply of 5% deposit mortgages for credit-worthy households by supporting lenders to offer these products through a government-backed guarantee.
Help to Buy: A government equity loan that supports first-time buyers with a low-interest loan towards their deposit.
Shared Ownership: Gives first-time buyers the option to buy a share of their home (between 25% and 75%) and pay rent on the remaining share.
First Homes: A new scheme designed to help local first-time buyers and key workers onto the property ladder, by offering homes at a discount of 30% compared to the market price.