Mortgage guarantee scheme will help buyers with 5% deposits

News at Waterfords | 15/03/2021

Mortgage guarantee scheme will help buyers with 5% deposits

We all know how challenging and daunting it can be to have to save a 15% or 20% deposit for your first home. This is especially challenging if looking to buy a property in the Surrey, Hampshire and Berkshire area, where house prices are much higher than the national average.

However, the 2021 Spring Budget brought good news for first time buyers and existing homeowners. Chancellor Rishi Sunak announced that the government is introducing a mortgage guarantee scheme to help hardworking people purchase their dream home.

In this blog post, Waterfords Estate Agents, with offices in Camberley, Chobham, Fleet and Yateley, will explain all you need to know about the scheme. If you have any questions, feel free to contact our friendly team on 01252 235348 or email who will be happy to point you in the right direction.

What is the mortgage guarantee scheme?

Under the new scheme, which will launch in April 2021, first-time buyers and existing homeowners will be able to purchase homes worth up to £600,000 with a deposit of just 5%.

The government pledges to repay lenders some of their losses if you as the buyer default on your mortgage repayments for any reason. In return for this guarantee, lenders have to sell mortgages worth up to 95% of a home’s price – so that you as the borrower can proceed with a deposit of just 5%.

This is a real game-changer for many first-time buyers as many 95% mortgages were made unavailable during the last year.

Will 95% mortgages be for first-time buyers only?

No, the government has confirmed that the mortgage guarantee scheme will be open to all buyers – providing the home you are buying is worth less than £600,000. This means that the scheme will help both first-time buyers as well as people who are looking to move up the property ladder.

How can you apply for a 95% mortgage under the scheme?

Some of the nation’s biggest banks have committed to the government scheme. Under the new scheme, the usual mortgage affordability checks will still apply. What this means is that first-time buyers and existing homeowners will need to prove to their lender that they can comfortably afford the monthly repayments after other essential spending has been covered.

How does the mortgage guarantee scheme differ from Help to Buy?

Under the current Help to Buy Equity Loan scheme, which was extended until 2023 for first-time buyers purchasing newly built homes, the government lends you up to 20% of the cost of your newly built home from an approved developer and then shares in any increase (or decrease) of the property’s value.

The property must be your only property and your permanent residence. You will need to put in a cash deposit of at least 5% and then a mortgage of up to 75% to make up the rest. You won’t be charged loan fees on the 20% loan for the first five years of owning your home. The maximum purchase price the scheme will cover is £600,000.

Read our other blog about buying a new build home, with a section dedicated to explaining help to buy assistance with new builds. 

Waterfords are here to help with any aspect of moving home

Waterfords Estate Agents recommend you seek the advice of a financial advisor before applying for a mortgage. Not only will they be able to find you the absolute best mortgage deals that might not be accessible if you go directly to a lender, but they will also be able to accurately run through your affordability checks in advance of your application. This will save you time, stress and money with your mortgage application!

Waterfords work with a reputable independent mortgage advisor, so please get in touch for further advice on the 95% mortgage scheme.

This article is intended as a guide only. To find out the full details of the mortgage guarantee scheme visit or contact us on 01252 235348 or email