There’s some exciting news for aspiring homeowners across the UK—especially those who’ve found it difficult to get on the property ladder due to the size of their deposit. The Government has officially confirmed the introduction of a new, permanent Mortgage Guarantee Scheme, and it could be a game-changer for the UK housing market.
What is the Mortgage Guarantee Scheme?
The scheme provides lenders with a government-backed guarantee, protecting them against potential losses on high loan-to-value mortgages. This added security encourages more lenders to offer mortgages to buyers with just a 5% deposit, opening the door for many who previously found homeownership out of reach.
For years, one of the biggest barriers to homeownership has been the difficulty of saving for a large deposit—especially in high-cost areas. This scheme directly addresses that challenge, making it easier for first-time buyers, and those with limited savings, to secure a mortgage.
Lenders are already making positive moves
Two major mortgage lenders have already updated their lending criteria to support more buyers:
• One has lowered the minimum income required to access its Helping Hand range, which offers up to 6x loan-to-income and up to 95% loan-to-value:
- Sole applicants: now down to £30,000
- Joint applicants: now down to £50,000
- Available on new build properties too—great news for those looking for modern energy-efficient homes!
• Another has improved its range:
- Now available up to 95% loan-to-value for first-time buyers
- Minimum application income for their 5.5x loan-to-income range is now £50,000
These changes mean more homebuyers qualify for higher borrowing amounts, improving their chances of getting on the property ladder, and giving them access to a wider range of homes for sale that may have previously been out of reach.
More regulatory changes build further momentum
In another positive development, the Financial Conduct Authority (FCA) has adjusted regulations around high loan-to-income lending. Previously, lenders issuing more than £100 million in residential mortgages had to cap high loan-to-income loans at 15% of their portfolio. That threshold has now been raised to £150 million, giving smaller lenders and building societies more flexibility to support buyers with higher income multiples. This shift could lead to increased competition among lenders, more innovative mortgage products, and ultimately, better mortgage terms for buyers.
What this means for you
If you’ve been holding off buying a home because of deposit or income constraints, now might be the perfect time to revisit your options. With more lenders offering flexible terms and the government backing the process, homeownership is becoming more accessible than ever.
If you’d like to know how this news impacts your ability to obtain a mortgage or you’d like our help in securing the best mortgage deal for you, call us on 08000 38 37 36 or click to arrange your free appointment.
