Government Outlines The Mortgage Guarantee Scheme

The Government has announced a new mortgage guarantee scheme to support a new generation in realising the dream of home ownership. This will increase the availability of 95% Loan-to-value mortgage products, enabling more households to access mortgages without the need for prohibitively large deposits.

A number of the UK’s largest lenders including Lloyds, NatWest, Santander and Barclays will be offering the mortgages from next month and will be available for new mortgages up until 31st December 2022.


The scheme is designed to increase the appetite of mortgage lenders for high loan-to-value lending to creditworthy customers. It will provide lenders with the option to purchase a government guarantee that compensates them for a portion of their losses in the event of foreclosure.

For this reason, a mortgage eligible for a guarantee under the scheme will need to:

• be a residential mortgage (not second homes) and not buy-to-let
• be taken out by an individual or individuals rather than an incorporated company
• be on a property in the UK with purchase value of £600,000 or less
• have a loan-to-value of between 91 percent and 95 percent
• be originated between the dates specified by the scheme
• be a repayment mortgage and not interest-only and
• meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage, for example a loan-to-income and credit score test

Long Term Fixed Rate Mortgages

The scheme will help to ensure the mortgage market provides options for consumers with smaller deposits who also want a mortgage with the security of predictable repayments for a longer period. For this reason it will be a requirement that any lender participating in the scheme must offer a five year fixed rate product as part of their range of mortgages offered under the guarantee.

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A full outline of the scheme can be accessed here

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