Homebuyers with small deposits have an extra year to use the Mortgage Guarantee Scheme, after the Government announced it has been extended until December 2023.
The mortgage guarantee scheme was introduced in April 2021 to help those with small deposits either get onto or move up the property ladder, after the pandemic saw a dramatic reduction in the number of 95% mortgages available.
Under the scheme, lenders are provided with the option to purchase a guarantee on mortgages where the deposit is less than 10%. The guarantee means lenders will be compensated in the event the borrower defaults on their mortgage and the property has to be repossessed.
The scheme can be used for mortgages on both new and existing homes up to a value of £600,000, and is available to first time buyers andhome movers. Around 85% of mortgage completions through the mortgage guarantee scheme to date have been for purchases by first-time buyers. The scheme was originally due to finish on 31st December this year, but will now run until the end of 2023.
John Glen MP, Chief Secretary to the Treasury said: “For hard-working families facing today’s challenging economic conditions, it’s right that we continue to help them secure their first home or move into their dream house.
“Extending this scheme means thousands more have the chance to benefit, and supports the market as we navigate through these difficult times.”
More than 24,000 households have bought a property using the mortgage guarantee scheme since it was introduced last year, according to government figures. Since 2010, over 687,000 households have been helped into home ownership through government schemes.
Other measures to help first time buyers get onto the property ladder include recent Stamp Duty changes, which mean they only start paying stamp duty from £425,000, up from the previous £300,000 threshold. The value of a property on which first time buyers can claim relief has increased to £625,000, up from £500,000.
These higher thresholds only apply until April 2025, at which point they will reduce to their previous levels.
Mortgage Guarantee Scheme extended for a year