What is the Mortgage Guarantee Scheme?
The Mortgage Guarantee Scheme is a government initiative that encourages lenders to offer 95% loan-to-value (LTV) mortgages by providing a partial guarantee against lender losses. This makes lenders more willing to offer high LTV products, helping buyers who have saved 5% deposits to purchase properties worth up to £600,000.
The scheme was introduced in April 2021 and has been extended multiple times, most recently until June 2025. It's available for both first-time buyers and home movers purchasing their primary residence.
How Does It Work?
The government guarantees a portion of the mortgage against the risk of the borrower defaulting and the property being repossessed at a loss. This guarantee covers losses between 80% and 95% LTV, reducing the lender's risk exposure on high LTV lending.
For borrowers, the scheme is invisible - you apply for a 95% mortgage from participating lenders as normal. The government guarantee operates between the lender and government, not involving borrowers directly.
Eligibility Requirements
The scheme covers mortgages on properties in the UK worth up to £600,000 (the same as stamp duty first-time buyer relief threshold). The property must be your primary residence - it doesn't cover buy-to-let or second homes. Both first-time buyers and existing homeowners can use the scheme.
Standard mortgage affordability rules apply. You'll need to pass the lender's affordability assessment based on your income, debts, and credit history. The scheme makes 95% mortgages available but doesn't change affordability criteria.
Participating Lenders
Major high street lenders participate in the scheme, including Barclays, HSBC, Lloyds, NatWest, Santander, and Nationwide. Several building societies also offer scheme-backed products.
Not all 95% mortgages use the scheme - some lenders offer high LTV products without the government guarantee. The scheme simply ensures broad availability of 95% mortgages across the market.