Government Backing Lends a Hand to Homebuyers

Getting together a deposit for a mortgage may have seemed a distant dream for many for a while now with house prices on an upward trajectory. You know what it’s like - you see a property and you think it’s the one, it has a kitchen to die for and beautiful spaces in the established garden, but then you realise that the deposit puts it out of your reach.

This is an interesting one because lenders have been feeling somewhat cautious about lending, particularly given the current crises in the world, and the effect on the job market and homeowners ability to pay their mortgages.

However, this nervousness and a distinct lack of mortgage products available to those who can’t raise the required deposits has made the Government think about what it could be doing to inspire confidence.

In an attempt to keep the housing market buoyant, ministers recently introduced the 95 per cent mortgage government guarantee.

But, what’s it all about?

For the buyer, it means you will only need to find a five per cent deposit. The good news is that this could really unlock the door to that previously out-of-reach house move.

That’s huge news, particularly for those wanting to leap into a new property or those trying to get on the property ladder.

For the mortgage lender too, this Government backing will give them more confidence to offer a wider selection of mortgages and deals. The Government is only backing part of the loan but even so, this should give lenders confidence and make them less risk averse.

As the Money Saving Expert website points out, the scheme is similar to the Government’s five per cent Help To Buy scheme that ended in 2017. The difference is that this new initiative can be accessed by anyone, whether they are buying their first home or have been a homeowner in the past. There is a criteria that must be met and you will still have to pass the usual mortgage approvals process.

Help to Buy: Equity Loan Scheme

This new scheme should also act as a reminder that another new initiative was launched in December 2020 - the Help to Buy: Equity Loan scheme.

Similar to the previous HTB scheme, it relates to newbuild properties and the Government will loan the homebuyer up to 20 per cent of the cost.

If you are an eligible first-time buyer, you will pay a deposit of five per cent (or more) and then arrange a mortgage of 25 per cent (or more). Be aware though, there are regional price caps that mean only homes below a certain price are covered.

Whichever way you want to buy your new home, Satchells can help you. We have 100 years of experience and will be delighted to talk with you to understand your mortgage requirements and needs.

Call the Satchells team on 01462 410394 or email us at salesadmincentre@satchells.co.uk