The mortgage guarantee scheme

  • Deposit required: 5% deposit
  • Ownership: Full Ownership
  • Headline benefits: For households looking to buy with a 5% deposit on properties costing a maximum of £600,000 to apply for a 95% loan to value (LTV) mortgage with participating lenders offering a government backed mortgage guarantee scheme.
  • Headline requirements: Available from participating lenders across UK on properties with a purchase price of £600,000 or less, where a borrower has a deposit of 5%. Available to first time buyers and existing homeowners who are looking to move and require a 95% Loan-To-Value mortgage.


The mortgage guarantee scheme (launched in April 2021) is helping to increase the supply of 5% deposit mortgages for credit-worthy households by supporting lenders to offer these products through a government backed guarantee on new 95% mortgages until 31 December 2023.

The scheme follows on from the successful 2013 Help to Buy: Mortgage Guarantee Scheme, which helped to restore the low deposit mortgage market after the financial crisis, giving those who could afford mortgage repayments but not the larger deposits the chance to buy a new or bigger home.

You can access more information on how to apply for a 5% deposit mortgage by contacting a mortgage broker or lender participating in the scheme.

The scheme offers lenders the option to purchase a guarantee on mortgages where a borrower has a deposit of only 5%.

The guarantee compensates mortgage lenders for a portion of net losses suffered in the event of repossession. The guarantee applies down to 80% of the purchase value of the guaranteed property covering 95% of these net losses. The lender therefore retains a 5% risk in the portion of losses covered by the guarantee. This ensures that the lender retains some risk in every loan they lend.

The government is committed to making the aspiration of home ownership a reality for as many households as possible. It wants current and future generations to experience the benefits of owning their own home, in the same way as their parents and grandparents.

The effects of COVID-19 left lenders reluctant to independently offer 95% Loan-to-Value mortgage products, with only 8 products available nationwide in January 2021, compared to 386 products available in December 2019, meaning some creditworthy households could not get a mortgage.

Increasing the availability of 95% Loan-to-Value mortgages has helped support First Time Buyers with smaller deposits take that all important first step onto the housing ladder. In addition, the scheme has supported existing homeowners who wish to move, adding movement into the housing market and freeing up additional supply of affordable homes for First Time Buyers.

The scheme was due to end on 31 December 2022 but it has been extended to the end of 2023.

First time buyers often find it hard to save for a large deposit, and the mortgage guarantee scheme has helped over 24,000 households (as of November 2022) overcome this barrier and secure the keys to a new home with a deposit as small as 5%.

As well as first time buyers and current homeowners, the scheme has also helped support the wider housing sector. Lenders reduced the availability of high LTV products during the Covid-19 pandemic, with just eight 95% LTV products available in January 2021. The government’s Mortgage Guarantee Scheme helped restore competition and consumer choice to the market, which has benefited businesses and boosted the market.

The mortgage guarantee scheme offers lenders the option to purchase a guarantee on mortgages which compensates the mortgage lenders for a portion of net losses suffered in the event of repossession. The borrowers who take out any mortgage product under the scheme will remain responsible for repayments in the same way as a normal mortgage.

The scheme will continue to support responsible lending, meaning borrowers must continue to pass all the usual affordability tests set out by lenders, the Financial Conduct Authority and Financial Policy Committee in order to access a mortgage under the guarantee.

No, although it is important to note that the interest rate charged on mortgage products is set at the discretion of each lender.

As with all mortgages, you should talk to your lender as soon as your circumstances change. If you fall into financial difficulties, you should speak to your lender. You may also wish to seek independent advice as soon as possible.

You can get free and impartial information and advice on money matters from the Money Advice Service. Their advice is available online, face-to-face, or by calling the Money Advice Service helpline on 0300 500 5000.

You will not be treated differently by your lender if you have a mortgage which is included in the mortgage guarantee scheme. If the lender must repossess the property, you will be responsible for repaying any shortfall between the amount you owe to the lender and the amount recovered once the property is sold.

Your mortgage lender will need to provide your personal information to the scheme administrator,  acting on behalf of the government. However, this is subject to strict controls and will only be used for specific purposes. This will include ensuring that your mortgage is, and remains, eligible for the guarantee scheme and to assess, from time to time, the current status of your mortgage, and the potential exposure for the government under the guarantee.

The government may also use your personal information for the following purposes:

  • complying with any present or future law, rule, regulation, guidance or directive
  • establishing, exercising or defending legal rights
  • complying with demands or requests made by domestic regulators  and law enforcement  authorities (whether or not having the force of law)
  • complying with any subpoena or court process or in connection with any litigation