Budget 2021: What does it mean for property market?

There’s a new mortgage guarantee scheme

The Chancellor announced a new mortgage guarantee scheme, aimed at helping buyers get a mortgage with a 5% deposit. Under the scheme, the government will give a guarantee to lenders across the UK that offer mortgages to people with just a 5% deposit. This should mean a return of 95% mortgages, which virtually disappeared when the pandemic started.

Major providers including Lloyds, HSBC, NatWest and Barclays are already on board with the scheme, which starts next month. You can buy any type of property worth up to £600,000 through it, not just new builds. And first time buyers and existing homeowners can apply.

It will be available for new mortgages up to 31st December 2022 – so you have 18 months to take advantage. And you’ll be able to fix your initial mortgage rate for at least five years if you wish to. However, you’ll still need to tick the usual boxes when getting a mortgage. This includes having a regular income, a good credit rating and to be able to afford the monthly mortgage repayments.

Mortgage guarantee ‘Good news – but explore your options’

HomeOwners Alliance Chief Executive Paula Higgins says, ‘It’s great news that the main providers are already on board for when the scheme goes live next month – this was lacking in the previous Help to Buy mortgage guarantee scheme which ended in 2016.  We also welcome the fact anyone can use the scheme, not just first time buyers.

‘However, we know from experience that these mortgages weren’t cheap so it’s essential that people shop around,’ warns Paula. ‘And buyers may be able to get significantly cheaper deals if they can save a 10% deposit.

‘Aspiring homeowners should also be aware of other measures available to help them,’ adds Paula. ‘These include the Lifetime ISA; if you are under 40 you can save into these and the government will give a 25% bonus of up to £1,000 a year on any savings deposited. Also, the Help to Buy: Equity Loan Scheme allows people to buy a new build home with a 5% deposit; however under new rules this is now only open to first time buyers with regional price caps that aren’t as generous.’

IdentityFS have access to the whole of market. We can therefore source the cheapest product, that’s right for you and your circumstances in minutes. If you would like to discuss the mortgage guarantee scheme, or 5% deposit mortgages. Then please get in touch we would be happy to help