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95% LTV Mortgages

Mortgage guarantee scheme explained

How the government-backed scheme nudges lenders to offer 95% LTV mortgages, and what it means for you.

2 min readWritten by Ali Jabbar

The Mortgage Guarantee Scheme is a UK government measure that encourages lenders to offer 95% LTV mortgages. Here is how it works and what it means for you if you are buying with a 5% deposit.

What is the Mortgage Guarantee Scheme?

The Mortgage Guarantee Scheme launched in April 2021 and has been extended several times since. Under it, the government guarantees part of the loan for lenders who offer 95% LTV mortgages. If a borrower falls behind and defaults, the guarantee covers a slice of the lender’s loss, which makes lending at high LTV less risky for them.

It covers properties worth up to £600,000 and applies to repayment mortgages on a home you will live in. Buy-to-let properties and second homes fall outside it.

How does it affect borrowers?

You never apply to the scheme yourself. When you take out a qualifying 95% LTV mortgage, the lender draws on the government guarantee in the background, and you apply for the mortgage in the usual way.

The effect has been more 95% LTV products on the market and rates that stay more competitive. Before it came in, a lot of lenders had pulled out of 95% LTV lending completely, so buyers with a small deposit had barely anywhere to turn.

Which lenders participate?

Several of the larger lenders take part, among them Lloyds Banking Group, Santander, Barclays and HSBC. The list is reviewed from time to time, and other lenders can join as it goes on.

Your adviser can tell you whether a given product is backed by the scheme, though for your application it rarely changes anything. The real value of the scheme is that its existence keeps more 95% LTV deals on the shelf for you to choose from.

Written and reviewed by

Ali Jabbar

Role
Managing Director
Specialism
Complex Income & First-Time Buyers
Regulator
FCA register
“Most 95% ltv cases come down to one thing: the right lender for your circumstances. We’ll find them — and walk you through every step.”
— Ali Jabbar
Get a quoteor call 020 3829 9515

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