New 95% LTV Help to Buy scheme to launch.

This new help-to-buy scheme seeks to continue improving the quality of life of buyers.

The government will launch a 5% deposit Help to Buy mortgage guarantee scheme on Wednesday. It will be limited to properties with a value of up to £ 600,000, although it will not be restricted to new buyers or new construction, such as the new version of the home equity loan scheme.

Lenders using the scheme will offer fixed mortgages for at least five years.

Under the terms of the plan, banks and home loan companies will be able to purchase a government guarantee to compensate them for a portion of their losses in the event of recovery.

“Millions of people dream of owning their own home.”

Chancellor Rishi Sunak said: “Owning a home is a dream for millions of people across the UK and we want to help as many people as possible.

“Saving for a large deposit can often be difficult, and the pandemic has meant fewer low-deposit mortgages are available.

“So by giving lenders the option of a government guarantee on 95 percent of mortgages, many more products will be available, helping people achieve their dream and climb the housing ladder.”

This announcement is similar to the Help-to-Buy mortgage guarantee scheme, which was introduced to revive the housing market after the global financial crisis but closed for new loans at the end of 2016.

Since then, buyers have only been able to take advantage of the Help to Buy home equity loan program, which is limited to new-build properties.

For new construction built after April 1, 2021, a new version of the equity loan scheme will introduce regional price caps, while it will only be available to first-time buyers.

This scheme will benefit first-time buyers.

Mark Hayward, Senior Policy Advisor at Propertymark, said: “A government-backed mortgage guarantee scheme will help first-time buyers climb the housing ladder at a time when homeownership seems to many an impossible dream.”

“Along with the possible extension of the stamp duty exemption that we have been requesting, this new scheme will give first-time buyers some hope at a time when the size of the deposits required means they fall at the first hurdle.”

In the budget, there will likely be news of an extension of the stamp tax holiday, while the government could also allocate more funds to help those living in buildings with unsafe linings.

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