The New Mortgage Guarantee Scheme Explained
What is the new Mortgage Guarantee Scheme?
The Government has announced the return of the Mortgage Guarantee Scheme – this time as a permanent measure – designed to help buyers who struggle to save for a large deposit.
In simple terms, the scheme allows buyers to purchase a home with just a 5% deposit, as the Government provides lenders with a guarantee on mortgages above 90% of the property’s value. This means mortgages between 91% and 95% loan-to-value (LTV) are supported by the scheme.
It’s important to remember that borrowers remain fully responsible for making their monthly repayments. The Government’s role is not to pay the mortgage, but to give lenders the confidence to offer higher-LTV mortgages by covering some of their loss if the borrower defaults.
This initiative is not entirely new – a similar scheme ran from 2021 until June 2025. However, the difference now is that it has been reintroduced on a permanent basis, giving buyers and the property market more certainty for the future.
How it works
The scheme is available to first-time buyers and home movers across the UK.
It can only be used for a main residential home – it does not apply to second homes or buy-to-let purchases.
Unlike the previous version, there is no cap on property value, opening the door to a wider range of buyers.
Applicants must still meet the lender’s usual affordability and credit checks. The scheme does not change how mortgages are assessed, only the level of deposit required.
Not all banks and building societies will participate, so buyers should check carefully which lenders are offering mortgages under the scheme.
As always, professional financial advice is strongly recommended to ensure the mortgage product chosen is the right fit for the individual buyer’s circumstances.
Why this matters for the market
While the number of people who directly benefit from the scheme may be relatively modest – the previous version was used by around 53,000 buyers over four years – the ripple effect across the housing market could be significant.
Here’s why:
More first-time buyers gaining access to mortgages means they can step onto the ladder sooner.
This in turn unlocks opportunities for second-steppers and families looking to move up the ladder, as there is more demand for their homes.
A chain reaction is created, which helps the entire property market flow more smoothly – from starter homes right through to larger family properties.
What this means for you
If you are thinking about buying but struggling to save a 10% deposit, the Mortgage Guarantee Scheme could be a real opportunity. It may also help if you are looking to sell, as it increases the pool of potential buyers who can afford to make an offer.
At Putterills, we are always on hand to guide you through your options. Whether you’re considering buying your first home, moving up the ladder, or selling to make your next move, our team can connect you with trusted mortgage advisers who can explain the scheme in more detail and help you decide if it’s right for you.