High Street mortgage lenders have begun to offer mortgages to buyers who only have a 5% deposit, under a new government guarantee scheme. Many of these low deposit mortgages have disappeared in recent years.
The policy, announced by the UK Government earlier this year, is designed to help more first time buyers onto the property ladder.
The scheme is available to anybody buying a home costing up to £600,000, but is NOT available on buy-to-let properties or second homes. The government is offering mortgage providers a guarantee on a proportion of the total amount lent if the borrower defaults on repayments. Barlcays, HSBC, Lloyds, Natwest and Santander are offering products now, with Virgin Money offering products next month.
Whilst this guarantee will be welcome news for buyers who only have a small deposit, there may be more attractive mortgage deals for purchasers with a larger amount. In addition, some lenders are NOT offering products on the guarantee scheme on new-build properties. You should always seek advice from an IFA before making any decisions on financing property. If you do not have an IFA, we can suggest one for you.