You could buy your new home with just a 5% deposit

Buying your own home with a deposit as low as 5%

The Mortgage Guarantee Scheme

What is the mortgage guarantee scheme?

  • The mortgage guarantee scheme was announced by the UK Government on 03 March, as part of the 2021 budget.
  • The scheme provides support for banking institutions to offer new 91% - 95% LTV mortgages.
  • Mortgages issued under the scheme are backed by the UK Government. This means, if you were unable to pay back what you borrow, the UK Government would financially support the lender to help mitigate any losses.

Can I take advantage of the mortgage guarantee scheme?

  • The scheme was launched in April 2021, and will be open to new applications until December 2022.
  • As part of the scheme, Royal Bank are now offering a range of 91-95% LTV mortgages.

Will anybody be able to get a 95% mortgage?

While 91-95% LTV mortgage rates are available, as with all mortgage applications, there are a number of checks we consider before we may be able to offer you a mortgage. We have to make sure that your financial and personal circumstances mean you should be in a good position to pay back what you borrow.

Along with the normal mortgage checks, to be eligible, the mortgage must be;

  • for a property valued no more than £600,000
  • on a property not classed as a new build property
  • a loan-to-value (LTV) of between 91% and 95%
  • a residential mortgage (i.e. not a second home, or buy-to-let property)
  • a repayment mortgage and not an interest-only mortgage
  • taken out by an individual or individuals, not a business

Also, you will be unable to take out any additional borrowing on your mortgage for the next 7 years.

What does 'LTV' mean?

It means 'loan-to-value' and is the percentage of the property's value that's being covered by the mortgage. You may see 95% mortgages described as '95% LTV'. 

If your mortgage is £200,000, and your property is valued at £250,000, your LTV is 80%. 

LTV is a percentage figure that reflects the amount of your property that is mortgaged. The remaining amount is yours and is usually referred to as your equity.

Buying your first home?

It can be daunting when you are looking to buy your first home. There are lots of things to think about and consider.

Why not take a look at our First Time Buyers guide to help get you on the path to buying your own home.