First-time buyers may be pleased to hear that in today’s Autumn Statement, the Chancellor revealed that the Mortgage Guarantee Scheme will continue into 2024 and the first half of 2025.
Chancellor Jeremy Hunt has just announced that the Mortgage Guarantee Scheme has been extended by 18 months, now running until June 2025 instead of December 2023.
This scheme, launched in April 2021, gives first-time buyers with smaller deposits a fighting chance to step onto the property ladder. By offering mortgage lenders the option to purchase a mortgage guarantee with as little as a 5% deposit, aspiring homeowners now have more opportunities to make their dreams a reality.
The Mortgage Guarantee Scheme is available for someone buying a property that will be their only home, whether they are applying for a joint or single mortgage. Applicants must want to apply for a repayment mortgage with no interest-only element to the borrowing. Borrowers must have a deposit of at least 5% and be looking for a 95% mortgage.
The scheme can’t be used for new-build properties, second homes or buy-to-let properties.
Under the guarantee part of the scheme, mortgage lenders will be compensated for up to 95% of net losses in the event of repossession, as well as 80% of the property’s purchase value.
Previously set to close to new applications on December 31st, 2023, the scheme’s extension has sparked a mix of reactions. Some critics argue that lenders scarcely used it in the past year, while others are curious to see if the extension will impact the market in the new year.