The Mortgage Guarantee is the second part of the Help to Buy scheme and is available for new build and existing properties for first time buyers and existing homeowners.
This part of the scheme allows you to purchase a new or pre-owned property with a 5% deposit and a 95% mortgage. The government then guarantees up to 15 per cent of the mortgage to the lender in return for a fee. This is an agreement between the lender and the government. This provides lenders with security and encourages more lenders to provide higher loan-to-value mortgages and can open doors to more availability for 80% - 95% offers.
You cannot use this scheme in conjunction with any other government housing scheme. The purchase property must be your only property and can be used for properties up to the value of £600,000. There is no income limit and the property cannot be used as a buy to let or sub-let.
The scheme is only available on repayment mortgages and not interest-only mortgages. The mortgage works like any other mortgage you will still have to apply the same way and be approved by the usual affordability testing. The mortgage guarantee scheme will run until December 2016.
There is a wide range of lenders in the scheme. Check with your mortgage lender or broker for more information regarding mortgages available for the scheme.
Get in touch for a conveyancing quote, or fill out our quick quote form on the home page.
Click here to read about the Equity Loan part of the scheme.