8 March 2021
There was good news for home buyers in the recent budget announced by Rishi Sunak on 3rd March 2021. The extension of the stamp duty holiday on residential property purchases up to 30th June, and a new residential mortgage guarantee scheme, offering buyers 95% mortgages, is a welcome step to helping people get onto the property ladder.
The new mortgage guarantee scheme has been launched by the government to help people realise their dreams of home ownership.
This involves increasing the availability of 95% Loan-to-value mortgages, which in turn allows a greater amount of people to access a mortgage without the need for extortionately high deposits.
Under the scheme, creditworthy homebuyers, will be eligible to take out a 95% mortgage when purchasing a residential property. This can be for a new build or older property purchased from April 2021 to December 2022.
A mortgage eligible for the guarantee under the scheme must meet the following criteria:
The Covid-19 pandemic saw mortgage lenders reduce their product offering of high loan-to-value (LTV) mortgages – particularly 95% mortgage products.
The mortgage guarantee scheme has been introduced as a means of combatting this issue, by encouraging lenders to offer high LTV mortgages to credit worthy customers.
The government will offer lenders the option to purchase a government guarantee that will compensate them for a portion of their losses in the event of foreclosure (should the customer default on their mortgage repayments). The government will charge the lender a commercial fee for the provision of the guarantee. The guarantee will cover up to 80% of the purchase value of the property.
The guarantee is valid for up to seven years from the date in which the mortgage is taken out.
True Solicitors conveyancing team are experienced in handling residential property transactions. Whether you are buying, selling or re-mortgaging contact us for a free, no-obligation conveyancing quote.
