The arrival of the COVID-19 pandemic in 2020 led to many lenders withdrawing their 90% LTV (loan to value) products during the first months of lockdown, meaning many potential first time buyers suddenly found themselves needing to raise more than the 10% deposit they had already saved.

90% LTV products started to reappear, on a restricted basis, following the announcement by the Chancellor in July that SDLT (stamp duty land tax) would be frozen on main residential properties up to the value of £500,000.  A potential saving for buyer and movers of up to £15,000.

Designed to stimulate the housing market after the initial slump during lockdown, the Chancellor’s scheme did just that with figures from the ONS showing that the average house price in England increased by 4.9% from £249,760 to £262,000.

This had the knock on effect that some buyers’ and movers’ deposits were no longer enough, pushing them outside of the 90% LTV.  We waited with bated breath to see what would be unveiled during the spring budget of 2020.

On March 3^rd 2021 Chancellor Rishi Sunak announced that the Government was to launch a mortgage guarantee scheme to enable those prospective buyers with smaller deposits gain a foothold on the property ladder, whilst offering the lender additional security with some of the debt guaranteed by the government for up to seven years after the mortgage funds are released.

Who is the scheme for?

Not just first time buyers, the scheme can also be utilised by those homeowner with low levels of equity that are struggling to remortgage and home movers wanting to take the next step.

Are there restrictions?

Yes there are, to be eligible the mortgage must:

• Be residential mortgage and your primary residence
• Be taken out by an individual or individuals not by an incorporated company
• Be in on a property the UK, the value must not exceed £600,000
• The loan to value (LTV) must be between 91% and 95%
• Be taken out between April 2021 and December 2022
• Be a repayment mortgage and not interest only
• Meet all standard requirements in terms of assessing the borrower’s ability to pay back the loan

Lenders are starting to release their 95% products, some are doing so outside of the mortgage guarantee scheme, and we envisage the next few weeks being busy with enquiries regarding the mortgage guarantee scheme.

For the full government document click here