Originally devised by the government as a flagship programme in 2016, the latest Help to Buy Mortgage Guarantee scheme came into play on 19th April 2021* in a bid to encourage people to get onto the property ladder following the Coronavirus pandemic. The scheme was announced in the Spring budget of 2021 and was devised to encourage banks to reintroduce 95% mortgages as, during the year since the pandemic had been confirmed and the budget reviewed, it was discovered that the availability of these 95% mortgages for first-time buyers had gone from 391 to just three. So far, the relaunch of this scheme has received the backing of five of the UK’s leading mortgage lenders who agreed to come on board from the day it launched.
What Is the Help to Buy Mortgage Guarantee Scheme?
The Help to Buy Mortgage Guarantee scheme is a UK government-led scheme designed to broaden the access of households to 95% loan-to-value (LTV) mortgage products.* It provides the lender with a safety net, which allows the scheme to work in the same way you would expect a regular mortgage to work, and it reassures the lender that they can recoup their costs should the property need to be repossessed.
The Help to Buy Mortgage Guarantee scheme requires you to provide a deposit anywhere between 5 and 9% of the purchase price of the property. In purchasing your new home, the remaining 95% of the cost is met through a mortgage based on a repayment package that has been agreed to beforehand with the lender.
If you are financially able to make the agreed-to monthly mortgage repayments but are unlikely to have raised enough funds for an initial large deposit, this scheme could be beneficial to you as it enables you to find a low deposit mortgage. You are, of course, then responsible for making the monthly payments as this is not guaranteed by the lender or the government.
The scheme is due to end in December 2022, with a view of it being reassessed before then, meaning you still have time to consider applying before the opportunity runs out. As it is similar to most mortgages, the Help to Buy Mortgage Guarantee scheme comes with the same terms you would expect from most residential mortgages. This is usually around 25 years but can vary depending on your broker.
How Do I Apply for the Help to Buy Mortgage Guarantee Scheme?
The application process is fairly straightforward. Our mortgage advisors will speak to a few mortgage brokers on your behalf. Once a preferred broker has been chosen, you fill out the mortgage application in the same way you would any other mortgage. This is something that our mortgage advisor can assist you with, making sure no stone is left unturned.
Who Is the Help to Buy Mortgage Guarantee Scheme for?
The scheme is available to both first-time buyers and existing homeowners. It is only accessible on existing properties, so cannot be used to finance a new-build home. If you have a new-build home, there are alternative schemes out there which our team can advise you on – so do get in touch.
The Help to Buy Mortgage Guarantee scheme is perfect for first-time buyers. As a first-time buyer, the housing market does not make it easy for you to find the cash for your deposit. This scheme aims to provide these potential home buyers with an affordable route, helping them secure a 5% deposit for a home of up to £600,000. Note that this scheme is for domestic households only. If you are a company looking to purchase a property, this Help to Buy option is not designed for you. In this instance, we advise you to speak to our experts who will be able to guide you in the right direction.
In most cases, there will be a criteria set that you will need to consider to make sure this is the right scheme for you. The eligibility criteria include items such as confirming it is your only property and you are not purchasing it as a second home or for rental purposes. The offer is made on the basis of making repayments not interest. You also have to pass what is known as a mortgage affordability check, which essentially means the broker you are considering will assess your income, how much you spend on bills, and other regular outgoings you may have to ensure you have the financial means to make your monthly repayments. Our experts will be able to guide you through this, making sure you have all of the necessary paperwork to carry out this check.
In terms of how the Help to Buy Mortgage Guarantee scheme works, you can access the scheme with your chosen lender in the same way you would a regular mortgage. Depending on your chosen lenders, there may be slight variations on how this works. This is something you can discuss with our experts who can provide you with the most compatible deal to suit you and your needs.
When considering if this is the scheme for you, make sure to take into account things such as the risk of negative equity. This is where your mortgage is greater than the value of your home, making it difficult for you to remortgage the property and move home later on down the line.
The key thing to note about the scheme is that the interest rates are high. The higher the deposit you make the better chance you have at receiving a decent rate. At a 5% deposit, you should expect to come up against a high-interest rate; however, if your deposit is around 9%, there is a chance the interest rate will fall below 3%. It’s important to note, though, that the rates are not guaranteed and are something to discuss with our experts when finding the deal for you. Once we have confirmed your initial rate, your broker will be able to make it a fixed price for five years, giving you the security of predictable repayments for a longer period.
Unlike some other schemes out there, the Help to Buy scheme does not have any additional costs. Schemes with lower interest rates often have extra fees attached to the mortgage as a way to compensate for the lower rate. For instance the Buy to Let Mortgage scheme can come with a Buy to Let fee. At Avail Mortgages, all the above can be discussed in more detail or complete our fuss-free Mortgage Search feature to find the right mortgage for you.
If you are self-employed looking to buy a home, whether you are a contractor, company director, or freelancer, you can apply for the Help To Buy Mortgage Guarantee Scheme – the only potential setback could be proving your income so make sure you have up-to-date records when making your application and speaking to our team. This will allow us to be in the best position possible when it comes to finding the right mortgage for you.
Why Choose Avail Mortgage Brokers?
At Avail Mortgage Brokers, our advisers are on hand to help you with any questions you have about the Help to Buy Mortgage Guarantee scheme. We ensure all our clients are treated equally, being kept up to date at every step, with no hidden surprises. We believe in being completely transparent with our clients, which is why our team remains highly responsive, from start to finish, ensuring their support is jargon-free and tailored to your personal circumstances and requirements.
We put your goals at the forefront of everything we do. We understand you have busy lives and unexpected things can happen, which is why we offer support in tandem with your schedule, allowing you to speak to your mortgage adviser at a time that is suitable for you.
Communication is something we pride ourselves on at Avail Mortgages. You can contact our advisors through a range of mediums including WhatsApp, email, phone call, or whichever form of communication is suitable for you and your needs. Our high client retainer rate also is a testament to the quality of our service, which ranges across reputable third-party products such as AXA, Aviva, LV, and Zurich. This, alongside our industry knowledge of over 35 years, has allowed us to establish great links, with many invaluable success stories of helping clients find suitable mortgages to afford their dream homes.
Should an issue arise where you require additional mortgage support with our help, we will ensure the issue is resolved as quickly as possible. Alongside the Help to Buy Mortgage Guarantee scheme, we also provide services such as Life Insurance and Buy to Let mortgages, leaving no stone unturned.
Based in the heart of Yorkshire, we work across Leeds, York, Harrogate, Sheffield, Bradford, as well as nationwide. Have a question about the Help To Buy Mortgage Guarantee scheme? Make an appointment with a member of our team today for a hassle-free approach to finding your perfect mortgage match.
Get In Touch
For a hassle-free approach to bad credit mortgages that takes your financial circumstances into account and provides you with the best mortgage Lenders around, please contact Avail Mortgages today. Our mortgage brokers provide help for first time buyers, home movers and those looking to remortgage, as well as those in need of funds. Supporting clients around the UK including areas such as Leeds, York, Bradford, Harrogate, Sheffield and Huddersfield, our adverse credit mortgage brokers will do all they can to help, and provide you with the best possible live rates around. So, what are you waiting for?