Latest news with #Chancellor'sSpendingReview
Scottish Sun
5 days ago
- Business
- Scottish Sun
Mortgage guarantee scheme offering 95% loans confirmed in government plans
Read below to see when the change comes into place Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) FIRST-TIME buyers with 5% deposits will continue to get help through a mortgage guarantee scheme, the government has confirmed today. The new scheme will be permanently launched from this month and means first-time buyers can borrow up to 95% of the home price. Sign up for Scottish Sun newsletter Sign up 1 Rachel Reeves' Government has confirmed a replacement for the mortgage guarantee scheme Credit: PA It replaces the previous Mortgage Guarantee scheme which first launched in 2021 and ended last month. Plans to relaunch the scheme were initially laid out in the Chancellor's Spending Review earlier this month. The move, reiterated in government documents published today, allows buyers to purchase a home across the UK with just a 5% deposit. The government then provides a guarantee to the lender to cover some losses if the buyer cannot repay their mortgage and the property gets repossessed. It is significantly lower than the 10% or 20% deposit many lenders ask buyers to pay when securing a home. For example, if you bought a house for £350,000, you would only need to pay a deposit of £17,500. Someone required to pay a 20% deposit on a property of the same value would have to make a down payment of £70,000. Since the scheme began, over 53,000 mortgages have been completed using it, with a total value of £10.7billion as of December last year. The small deposit mortgage deals were previously popular leading up to the 2008 financial crash but were phased out afterwards. The scheme has been hailed as an accessible way for buyers to get on the ladder. But the larger loan-to-value ratio for the mortgage means buyers will pay higher interest rates when they make repayments. Rachel Reeves FINALLY addresses Commons tears after she and Keir Starmer put on awkward show of unity Peter Stimson, director of mortgages at lender MPowered Mortgages, said the move comes "a year too late". He said: "The mortgage market has changed a lot since Rachel Reeves swept into 11 Downing Street last July. 'The Base Rate has come down by a full percentage point and hundreds of 95% LTV mortgage products are now available. 'Every lender who wanted to offer a 95% loan is probably already doing so. "The Chancellor's announcement is unlikely to make dozens more suddenly follow suit - as the price of entry is unknown and will vary each year." Many lenders are offering their own take on the 95% mortgage. Nationwide just recently launched a 95% mortgage for buyers looking to purchase a new build home. The offer also allows customers to borrow six times their annual income through its Helping Hand scheme. Elsewhere, Skipton Building Society offers a 100% mortgage deal that allows you to buy a home without a deposit. A similar mortgage deal was recently launched by April Mortgages too. ALL CHANGE Mortgages will also be available at over 4.5 times a buyer's income, following recommendations from the Bank of England to loosen lending rules. This will create more than 36,000 additional mortgages for first-time buyers over the first year, the Government said. Britain's biggest building society Nationwide also announced plans last week to make its "Helping Hand" mortgage scheme for first-time buyers available to people on lower incomes. From Wednesday, eligible first-time buyers can apply for Nationwide's Helping Hand mortgage with a £30,000 salary, down from £35,000, and joint applicants with a £50,000 combined salary – down from £55,000. It has been estimated that this will support an additional 10,000 first-time buyers each year. Brian Byrnes, head of Personal Finance at Moneybox, said: "It is encouraging to see steps being taken to support first-time buyers. "Enabling people to borrow more is not a silver bullet. "What first-time buyers truly need is not just the ability to take on more debt, but meaningful, long-term support to help them start saving and investing earlier in life so they can build up that all-important deposit." Elsewhere, plans to cut the tax-free allowance for cash ISAs have been put on hold by the Chancellor, after speculation that reforms to the savings account would also be announced.
Scottish Sun
30-06-2025
- Business
- Scottish Sun
Vital scheme to get 1,000s on the get on property ladder with tiny deposit ends TODAY – full list of rival deals
Plus we reveal what other support is out there for first time buyers HOUSE HELP Vital scheme to get 1,000s on the get on property ladder with tiny deposit ends TODAY – full list of rival deals Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) A POPULAR scheme which helps thousands get on the property ladder ends today. The Mortgage Guarantee Scheme was first launched in 2021 and allows buyers to purchase a home with just a 5% deposit. Sign up for Scottish Sun newsletter Sign up 1 The Mortgage Guarantee Scheme helps buyers get on the ladder with a 5% deposit Credit: Getty It can be used to purchase homes worth up to £600,000. The government will then provide a guarantee to the lender to cover some losses if the buyer cannot repay their mortgage and the property gets repossessed. The scheme is set to end today, Monday June 30. But all hope is not lost for those looking for help to get on the property ladder. A new permanent mortgage guarantee scheme is set to launch next month. Plans for the support were initially laid out in the Chancellor's Spending Review earlier this month. Guarantees issued under the scheme will be valid for seven years after the mortgage is approved. Lenders who opt into the programme will also pay HM Treasury a fee for each mortgage entered into the scheme. Emma Reynolds, the economic secretary to the Treasury, said: "We committed to introduce a permanent mortgage guarantee scheme in our election manifesto to ensure buyers with smaller deposits can get a mortgage and fulfil their home ownership ambitions." The mortgage deals were popular leading up to the 2008 financial crash but were phased out afterwards. 5 things to check before applying for a mortgage WHAT OTHER DEALS ARE ON THE MARKET? News of the relaunch comes as many lenders are now offering their own 5% mortgage deals. Nationwide just recently launched a 95% mortgage for buyers looking to purchase a new build home. The offer also allows customers to borrow six times their annual income through its Helping Hand scheme. Elsewhere, Skipton Building Society offers a 100% mortgage deal that allows you to buy a home without a deposit. A similar mortgage deal was recently launched by April Mortgages too. Customers would need to have a household income of at least £24,000 and be looking to buy or remortgage a house that's valued at more than £75,000. The mortgage deal is available on 10 and 15-year fixed terms, so buyers would need to be happy to lock in for a long period of time. However there are no early repayment charges if you decide to move home or if you repay the mortgage in full. Yorkshire Building Society also has a 95% mortgage offer for first and second time home buyers. The fixed deal has an Annual Percentage Rate of Charge of 6.5%. This is a calculation that represents the total cost of a mortgage over its entire term, including all fees and interest. Elsewhere, First Direct also offers a 4.95% mortgage offer. The offer is fixed at 4.95% for five years before reverting to 6.74%. It has an APRC of 6.1% but offers no underpayments or payment holidays if you end up in financial difficulty. WHAT SUPPORT IS OUT THERE FOR FIRST TIME BUYERS? There are plenty of other support schemes for first time buyers. Earlier this year, TSB launched a new "5&5" concessionary mortgage option for its customers. Under the lender's new scheme, landlords would offer their tenants a 5% discount on the property's market value in exchange for putting down a minimum of 5% deposit. Concessionary mortgages allow wannabe homeowners to bag a property for less than the market value. They are usually used by landlords selling a house to their tenants, or someone selling a property to a relative. A number of lenders offer some variation of this mortgage type including Barclays and Natwest. Another option is a Lifetime ISA (LISA) which is designed to help people save for either a first home or retirement. The account is tax-free and anyone aged between 18-39 can open one. You can save up to £4,000 a year and the government will then add a 25% bonus on top. If you save the maximum amount between the ages of 18 and 50 you could get as much as £32,000 for free. You'll also earn tax-free interest on your savings pot, including the added extra from the government. If you choose to buy a property it must cost less than £450,000 and you must buy it at least 12 months after you make your first payment into the Lifetime Isa. There are strict withdrawal rules surrounding a LISA that prospective users should be aware of. For example, you can only make an authorised withdrawal from your LISA to purchase a house or if you are terminally ill. Elsewhere, the banking watchdog is looking to relax lending rules to help buyers get on the property ladder. The FCA said it would like to hear views on whether its rules "could better support more interest‑only mortgages'. The body said: "Interest‑only mortgages could be suitable for consumers who may struggle to afford a repayment mortgage and can support sustainable home ownership.' With this type of product, all you pay each month is the interest on the amount you borrowed.
