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Schemes for First Time Buyers: The Mortgage Guarantee Scheme
Tuesday, February 28, 2023
Tuesday, February 28, 2023
With only a month to go until the end of the Help to Buy Equity Loan Scheme, we take a look at some of the other schemes available to First Time Buyers.
This week’s pick is the Mortgage Guarantee Scheme. In 2013, the Government launched the Help to Buy: Mortgage Guarantee Scheme in response to a similar shortage in the availability of high LTV (Loan to Value) products following the 2008 financial crisis.
The Mortgage Guarantee Scheme has been extended by a year to the end of December 2023, helping people with 5% deposits on to the property ladder.
Key features:
- Available to First Time Buyers and existing homeowners.
- 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. The government will charge a commercial fee for the provision of this guarantee.
- The mortgage guarantee scheme is designed to increase the appetite of mortgage lenders for high loan-to-value lending to creditworthy customers.
- 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.
- The scheme will be open to any lender that has a permission under the Financial Services and Markets Act to enter into regulated mortgage contracts in the UK.
The guarantee will compensate lenders for the same losses and reasonable costs and the guarantee is valid for up to seven years after the mortgage is originated which makes this appealing to lenders.
If you have any queries regarding the Mortgage Guarantee Scheme, or other schemes available to First Time Buyers, please do not hesitate to contact the residential conveyancing team at Samuel Phillips Law on 0191 255 0255 or email conveyancing@samuelphillips.co.uk.
Written by Caitlin Armstrong, Conveyancer
Caitlin Armstrong is a Conveyancer in the Residential Property team at Samuel Phillips Law.
