Mortgage Guarantee Scheme Extended To December 2023
The government has announced the extension of the mortgage guarantee scheme that helps households secure a mortgage and step onto the property ladder.
The mortgage guarantee scheme is designed to switch the focus of households from renting to buying. Mainly, it aims at first-timers and helps them step onto the property ladder by offering favourable mortgage options.
To be precise, it enables just a 5% deposit of a home worth up to £600k while having the rest 95% as a mortgage. The government launched this initiative during the pandemic, as lenders withdrew many low-deposit loans. It supports households with good credit histories but small deposits via securing lenders from losses.
In a nutshell, it offers a financial guarantee to lenders on a portion of a mortgage product taken with the help of this scheme.
Mortgage Guarantee Scheme Extension 2023
Launched in April 2021, the mortgage guarantee scheme has been extended and will run until December 2023. It will continue to protect lenders against losses and support new buyers with small deposits, which is good news, considering the challenging market settings and the end of the help-to-buy scheme.
Originally, the mortgage guarantee scheme was due to end in December 2022, but the ministers extended it to run until next year.
Professionals Comment
Many specialists highlight the importance of the mortgage guarantee scheme for first-timers and existing buyers during challenging market settings. Its extension means thousands of households will be better off navigating the potentially challenging property market in 2023.
In total, the mortgage guarantee scheme has supported over 24,000 buyers, with 85% being first-time property buyers (FTBs).
Experts also point out the need for this scheme and its support for households with low deposits during turbulent times. It would probably be a mistake to withdraw from this scheme, given the continuing downward trends in property prices anticipated in the coming years.
