[19th April 2021] 95% LTV with government guarantee

High Street lenders are now starting to offer mortgages to borrowers offering a deposit of just 5% under a new government guarantee scheme.

The policy, announced in the Budget, is designed to help more first-time buyers secure a home.

The scheme is similar to policies previously used to boost the housing market and the economy, as well as offering support to those buying a home for the first time.

The new scheme will be available to anyone buying a home costing up to £600,000, unless they are buy-to-let or second homes.

The government is offering a partial guarantee, generally of 15%, to compensate lenders if the borrower defaults on repayments.

The guarantee is designed to give lenders the confidence to offer 95% loan-to-value mortgages - many of which were withdrawn during the Covid crisis.

Lloyds, Santander, Barclays, HSBC and NatWest are starting to offer products this week and Virgin Money will do so next month. 

However, some lenders such as Halifax, which is part of Lloyds Banking Group, and Barclays have said that these products will not be available for new-build properties.

However with rates around 4% if you can afford a higher deposit, which will of course give you a lower loan to value mortgage product you will get a much more competitive rate - saving as much as 1% in cases.