Mortgage Guarantee Scheme

As of July 15, 2025, the government launched the 2025 Mortgage Guarantee Scheme, a permanent initiative designed to help first-time buyers and home movers step onto—or up—the property ladder. At White Mortgages, we’re excited to break down this scheme, explain how it works, and highlight what it means for you as a prospective homeowner. Let’s dive in with a friendly, professional lens, perfect for navigating today’s housing market.

What Is the 2025 Mortgage Guarantee Scheme?

This scheme, introduced on July 15, 2025, replaces the previous Mortgage Guarantee Scheme that ended on June 30, 2025. It’s a government-backed program aimed at supporting buyers who struggle to save large deposits. By offering lenders a guarantee against a portion of potential losses if a borrower defaults, it encourages them to offer mortgages with loan-to-value (LTV) ratios of 91-95%. This means you can purchase a property with just a 5-9% deposit, making home ownership achievable for those with limited savings. The scheme applies across the UK, covering homes up to £600,000, and is a permanent fixture—unlike its temporary predecessor.

How Does It Work?

Here’s the nitty-gritty: the scheme targets repayment mortgages (not interest-only or buy-to-let) and is available to first-time buyers, existing homeowners looking to move, and those buying their main residence. Lenders participating in the scheme (not all do, so check with us!) provide mortgages where the government guarantees a portion of the loan—typically the top 5-10% of the LTV. For example, with a £200,000 property, a 5% deposit (£10,000) leaves £190,000 to borrow. The guarantee covers part of that 95% LTV risk, reducing lender hesitation.

You’ll need to meet standard affordability checks, and the mortgage must be your primary residence—no second homes or investment properties qualify. Interest rates might be slightly higher than lower LTV deals due to the perceived risk, but the trade-off is access to the market without needing 10-20% upfront.

Who Benefits?

This scheme is a game-changer for those priced out by deposit demands. First-time buyers, especially in high-cost areas like London or the South East, can now enter with less saved. Home movers upgrading to larger homes also benefit, particularly families needing more space. However, it’s not a one-size-fits-all solution—self-employed individuals or those with complex finances might need extra guidance, which our FCA-regulated advisers can provide.

The Pros and Cons

The upside is clear: lower deposit barriers open doors, potentially boosting the housing market. Data suggests it could help tens of thousands annually, with early estimates from industry bodies like the Council of Mortgage Lenders (CML) pointing to 30,000-40,000 additional mortgages yearly. It’s also a permanent tool, offering stability compared to past temporary schemes.

But there are caveats. Higher interest rates could mean larger monthly payments over time, and not all lenders participate, limiting choice. Overborrowing is a risk if buyers stretch finances, especially if rates rise later. The scheme’s success also hinges on housing supply—demand could push prices up, negating some benefits.

How We Can Help

At White Mortgages, we’re here to make this scheme work for you. Our advisers will assess your eligibility, compare participating lenders, and ensure the mortgage fits your budget. We’ll also explore complementary options like Shared Ownership or Lifetime ISAs if needed. With today’s date, August 11, 2025, the scheme is fresh—let’s seize the opportunity! DM us for a free consultation and let’s find your perfect path to homeownership.