New mortgage guarantee scheme to launch in April 2021

At last week’s budget the Chancellor also announced the introduction of a mortgage guarantee scheme to help both first-time buyers and existing homeowners.

The scheme will launch in April 2021.  It means first time buyers and existing homeowners will be able to benefit when purchasing a home up to a value of £600,000 with a deposit of between 5% and 9% of the value of the property.

Many 95% mortgages were withdrawn from the market during the past year, so this is great news for both first time buyers and those looking to move with a higher loan to value ratio.

Saving for a deposit can be difficult at any time so this will be a great help particularly for properties priced between £125,001 and £250,000 where the stamp duty holiday remains in place until 1st October 2021.

Cathy Wahlberg, Managing Director and Head of Property at Alsters Kelley Solicitors Ltd says, ‘It has been very challenging for first time buyers to raise deposits of 15% or even 20% over the past year so many people may now consider bringing forward their plans to buy or move home to take advantage of both initiatives.’

In addition to helping first time buyers more people are expected to move up the property ladder increasing the number of properties coming to market as a result of this initiative.

The average price of a property in the West Midlands is around £230,000.  Affordability checks will still be applied to a guaranteed mortgage so it will still be necessary to show that the mortgage is affordable.  Lenders are also required to offer a 5-year fixed rate product.

This initiative will open up a number of options for both the new and second-hand market.  To obtain a quote visit our website to obtain a no obligation no hidden fees quote www.alsterskelley.com