Providing a fantastic springboard for those wanting to buy their own property, but who don’t quite yet have the available funds – the 5% deposit is back!

Under the scheme, first-time buyers, home movers and previous homeowners with a 5% deposit will once again have access to 95% loan-to-value mortgages, allowing people with small deposits to get onto the property ladder.

When the Coronavirus pandemic hit last year, 5% deposits virtually disappeared however, this announcement was made in relation to the Government’s new budget, in a bid to help rebuild Britain’s housing market post the Covid-19 pandemic.

Mortgage Guarantee

During the recent budget unveiling, Chancellor Rishi Sunak has announced a ‘Mortgage Guarantee’ for buyers with a 5% deposit to help turn Britain from “generation rent into generation buy.” The scheme guarantees that the Government will shoulder some of the cost if the lender were to lose money, incentivising more lenders to join. Lenders including, Lloyds, NatWest, Santander, Barclays and HSBC are among those who will be offering the 95% mortgages from next month.

How does it work?

  • 5% deposits will be available to current homeowners as well as first-time buyers looking to buy a house up to the value of £600,000
  • The scheme runs from April 2021 through to December 2022
  • All lenders under the scheme will offer these mortgages fixed for at least five years
  • To be eligible you must be buying a residential home in the UK, which means that these mortgages can’t be used for second homes or buy-to-let properties.

Stamp Duty Cut Also Extended!

There’s more good news! In addition to the return of the 5% deposit, it has also been confirmed that there will be an extension to the stamp duty holiday from March 31st to June 30th, which means no property tax will need to be paid on homes costing £500,000 or less.

Between 1st July and 30th September, it will be reduced to £250,000, and then from 1st October, the previous threshold of £125,000 for home movers will be reinstated. This means that people buying before 1st June 2021 will be able to save up to £15,000, while those buying between 1st July and 30th September 2021 will be able to save up to £2,500 in tax.

Things to remember

Although all of this is brilliant news, it’s important to remember that the 5% deposit doesn’t suit everyone. When searching for the best mortgage deal for you, it’s so important to speak to a mortgage broker who can understand your full financial situation and ensure that you are on the best rate possible.

In addition to this, we expect many more 5% deposit products to come onto the market in the coming weeks – so it’s important to get in touch so that we can find the right mortgage for you.

Drop us an email at info@tmq.org.uk or give us a call 01392 660219 – we would love to help you achieve your dreams and make 2021 a happier one.

*Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

 

 

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