The New Mortgage Guarantee Scheme Explained

The Government has recently announced a new mortgage guarantee scheme. Here we’ll explain how it works and what it might mean for the property market.

What is the new Mortgage Guarantee Scheme?

The Mortgage Guarantee Scheme is an official scheme where the government backs mortgages that are larger than a bank or building society may be willing to offer.

In practical terms, this means that buyers who can’t get together a 10% deposit may be able to purchase with just a 5% deposit.

Many lenders will only lend 90% of the value of the home you want to buy. But this scheme backs mortgages from 91% up to 95%.

Borrowers are still responsible for the repayments. But the guarantee means that if they fail to meet repayments, the Government will cover some of the lender’s loss.

It’s similar to the scheme that ran between 2021 and June 2025. But this new scheme will be permanent.

How it works

The new Mortgage Guarantee Scheme is available to first-time buyers and home movers throughout the UK.

The scheme only applies to those buying their main home. There isn’t any cap on the value of the house or flat, and they’ll need to meet the lender’s standard lending criteria.

Borrowers apply for a mortgage in the usual way to lenders who opt to participate in the scheme (not all do). The lender applies to use the scheme and does all the admin.

Be aware that mortgages offered under this scheme won’t be right for everyone. Buyers should always take expert financial advice.

How it might affect the market

The number of people who will actually use the new scheme could be fairly small. The last scheme was used by 53,000 people over four years.

However, the impact on the broader property market could be much bigger. For example, if more first-time buyers can obtain a mortgage, more second and third steppers should be able to sell their homes and move up.

In short, the new Mortgage Guarantee Scheme could get the market moving and indirectly help everyone looking to buy and sell.