What is the Mortgage Guarantee Scheme?
Launched in April 2021 and extended multiple times since, the Mortgage Guarantee Scheme provides a government-backed guarantee to lenders offering 95% LTV mortgages. The guarantee covers a portion of the lender’s losses if a borrower defaults, reducing the risk of lending at high LTV.
The scheme is available on properties worth up to £600,000 and applies to repayment mortgages on main residences. It is not available for buy-to-let properties or second homes.
How does it affect borrowers?
As a borrower you do not apply to the scheme directly. Instead, when you take out a qualifying 95% LTV mortgage, the lender uses the government guarantee behind the scenes. You simply apply for the mortgage as normal.
The scheme has increased the number of 95% LTV products on the market and helped keep interest rates more competitive. Before the scheme, many lenders had withdrawn from 95% LTV lending entirely, leaving buyers with very few options.
Which lenders participate?
Several major lenders participate in the scheme, including Lloyds Banking Group, Santander, Barclays, and HSBC. The list of participating lenders is reviewed periodically and new lenders may join over time.
Your mortgage adviser can confirm whether a particular product is backed by the scheme, though in practice it makes little difference to your application. The key benefit is simply that more 95% LTV products are available because the scheme exists.