The return of 95% mortgages… what you need to know

The return of 95% mortgages… what you need to know

The recent news that 95% mortgages are set to make a comeback across the UK has been very well-received by homebuyers. Thanks to the mortgage guarantee scheme, all prospective buyers will be able to choose from mortgage products that require a 5% deposit (not just first-time buyers), helping them to finally get a foothold on that oftentimes elusive property ladder.

The mortgage guarantee scheme was first set up in 2013 and allowed lenders to offer mortgages without the need to put down a large deposit. Whilst readily available before the pandemic, as the situation progressed and the economy started to look more and more uncertain, 95% mortgages were then withdrawn. Their appearance back on the market is a good sign and one we know many of you will want to take advantage of… so read on to find out more!

A common problem for homebuyers is being able to manage their everyday living costs whilst simultaneously saving a substantial amount of money for a deposit. These high-value mortgages are a great way to help you make the move from renter to buyer, and the mortgage guarantee scheme could be just what you’re looking for. There are several factors that need to be taken into account when deciding whether this is the right route for you to go down. These include the type of mortgage you want to take out, the value of your prospective property, who is wanting to apply (including their credit score) and when the mortgage is taken out too. We would always advise speaking to one of our experienced mortgage team to check whether you are eligible/if this is a good option for your specific circumstances.

The reintroduction of 95% mortgages by lenders has been made possible due to government intervention. Namely, in the instance that the property owner is no longer able to pay their mortgage, lenders will be reimbursed by the government. There are terms and conditions attached to this, including a cap on the amount of money the government will guarantee against any losses, giving the lender confidence when offering these mortgages. It’s worth noting that lenders will also be responsible for a small portion of any net losses incurred… this is important as it means that lenders have a ‘stake in the game’ so to speak. In addition, it should give buyers peace of mind that the mortgage product they eventually go for is of high quality. This guarantee will remain in place for 7 years after the mortgage has originally been taken out, which is thought to be enough time for the homebuyer to have paid off a significant amount of their mortgage.

When it comes to the decision of which lender to go for, it’s likely that you’ll be spoilt for choice! We predict a vast number of lenders are going to be offering products – here at The Glasgow Mortgage Company we have access to a comprehensive panel of lenders, so you can trust us to give you all the available options (we are not tied to any one specific lender).

Get in touch

If you’d like to speak to us about taking out a 95% mortgage, get in touch. With products slowly but surely starting to become available, there’s never been a better time to start looking for your dream home. You can also follow us over on our Facebook page where we post up-to-date and recent news on both mortgage and protection.

Need help? Call or email us and we'll be happy to help with your enquiry.