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News & Views

There was some good news for prospective homeowners in Shropshire following the Chancellor’s Autumn Statement with the extension of the Government’s Mortgage Guarantee Scheme – but what does it mean in practical terms for people looking to get onto the property ladder?

The Mortgage Guarantee Scheme was launched in March 2021 to encourage lenders to offer 95% Loan-to-Value mortgages for properties up to £600,000, but the scheme was due to end at the end of the year.

Dwello Mortgages based in Telford welcomes the news that the scheme has now been extended by 18 months until June 2025. It has already proved helpful in getting our clients across Shropshire, Staffordshire and the West Midlands onto the property ladder and the 5% deposit means even more people will now be able to access mortgage products which may not have been open to them from January 1st if this scheme had not been extended.

In order to help prospective home-buyers understand the implications of the scheme, we have put together some frequently asked questions which we hope you will find useful:

Q: What is the Mortgage Guarantee Scheme?

A: “This Government scheme was launched to keep the property market moving by supporting a new generation in realising their dream of owning their own home. It increases the availability of 95% Loan-to-Value mortgage products, allowing more people to obtain a mortgage without the need of a large deposit.” 

Q: Does the scheme only apply to new builds?

A: “No. You are free to choose a new build or existing property but it must be bought by an individual rather than a company, it cannot be used for buy-to-let and must be valued under £600,000.”

Q: How does it work?

A: “You will need to provide a deposit of at least 5%, so if the home you are looking to buy is £200,000 you will need to find a £10,000 deposit and your lender will make the remaining £190,000 available to borrow. 

“Once your offer is accepted on the property you will need to apply for the loan from a bank or building society supported by the mortgage guarantee. It is always a good idea when setting out on the journey to buy your home to talk to a mortgage adviser. Dwello Mortgages has extensive experience and will help you avoid the pitfalls that can occur when buying a property.”

Q: How do I qualify?

A: “The scheme isn’t just available for first-time buyers but applies to anyone who wants to buy a property – although you must meet the following criteria, some of which we have already touched on: The property must be valued at less than £600,000, it can’t be used for buy-to-let, must be bought by an individual, and you will need to take out a repayment mortgage under the scheme as there will be no interest-only repayment options available.” 

Q: How much can I borrow?

A: ”It is usually the case that you can borrow up to four times your annual salary when providing your 5% deposit. Your lender will need proof of your income, they will need to check your credit rating and know about your expenditure along with any debts.”

These are all things that Dwello Mortgages can guide you on when you seek our advice – there really is no substitute for professional guidance from a firm that can smooth the process towards buying your own home.

There are still challenges ahead in the property market but the extension of the Mortgage Guarantee Scheme is certainly good news for buyers and we look forward to helping more people to buy their first home in the coming months.

Connect with our founder and principal mortgage adviser Nathan Blissett to book an initial consultation.

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