The Mortgage Guarantee Scheme 2021 is back.


After the success of the Help to Buy Mortgage Guarantee scheme in 2013, it was announced earlier this year that Help to Buy Mortgage Guarantee Scheme was back between April 2021 and 31 December 2022 (end date is subject to change) with the aim of increasing the supply of 5% deposit mortgages for eligible borrowers.

As reports show that last year (2020) the average deposit required by a first time buyer increased by 23%* with it potentially taking a single first time buyer 10 years to save a 15% deposit** the Mortgage Guarantee Scheme couldn’t have come at a better time for borrowers.

The Bank of England’s Financial Stability Report (December 2020) suggests that around 75% of renters are likely to be constrained by a lack of sufficient savings rather than by the affordability of mortgage repayments.


The mortgage guarantee scheme isn’t just for first time buyers, according to the Government’s Mortgage Guarantee Scheme document existing homeowners with low levels of equity in their property are also struggling to move or remortgage onto a more competitive deal. This inability to move has therefore limited the number of properties on the market available to first time buyers.


What is the Mortgage Guarantee Scheme?


It is a Government backed scheme, with the aim to increase the supply of 5% deposit mortgages for eligible applicants by supporting lenders to offer these products through a government backed guarantee on new 91-95% mortgages. The mortgage guarantee scheme offers lenders the option to purchase a guarantee where a borrower has a deposit of 5%.

This means that if the home was repossessed, the government will compensate the mortgage lender for a portion of the net losses. (Full terms and conditions will depend upon the lender and can be explained in detail by your adviser at the point of application). At present, the guarantee is valid for up to seven years after the mortgage is originated (again, check your Ts & Cs for the exact length of your mortgage guarantee) as evidence suggests that loans are unlikely to default after such a period of time has passed.


Who’s eligible for the Mortgage Guarantee Scheme?


As with all mortgages, each lender has it’s own set of lending criteria, which your mortgage adviser will discuss with you during the application process.

There are a few prerequisites that are specific to this type of mortgage, including; the mortgage must be for the main residential property (not a second home or BTL), the purchase price must be under £600,000, the mortgage must be a repayment mortgage & the mortgage must be taken out by individuals rather than an incorporated company.


If this is an option that you’d like to explore further your mortgage adviser will be happy to discuss your options. You can book an appointment by emailing mail@whitemortgagesltd.co.uk or calling 01522 540777




*Source: Halifax, January 2021

*Source: Hampton International, April 2019





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