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The mortgage guarantee program offering 95% loans to bring first-time buyers on the scale confirmed in the budget

RISHI Sunak confirmed that first-time buyers who are struggling to secure a mortgage can access the property ladder with just a 5% down payment.

The Chancellor unveiled the scheme in today’s budget, which will see the government backing home buyers’ mortgages with just 5% down on homes worth up to £ 600,000.

?? Read our live blog on Budget 2021 for the latest news and updates


Rishi Sunak announced the mortgage guarantee program in today’s budgetCredit: Getty Images – Getty

This means that if the borrower is unable to pay a month, the state will pick up the bill – although it is highly likely that there will always be repercussions for borrowers if this happens.

The program will halve the minimum amount first-time buyers need to buy their own homes.

Homebuyers will only need a deposit of £ 10,000 – instead of £ 20,000 – to be able to afford a £ 200,000 home.

It will launch next month and will be available for new mortgages until December 31, 2022.


All buyers can fix their initial mortgage rate for at least five years if they wish.

Mr Sunak announced that a number of the UK’s biggest lenders, including Lloyds, NatWest, Santander and Barclays, will offer the mortgages starting next month.

Other banks, including Virgin Money, would offer the loans “soon after,” he added.

He said: “Today I am announcing a new policy to support buyers: a mortgage guarantee.”

What is the Budget?

THE budget is when the government sets out its plans for tax hikes, cuts and things like minimum wage changes.

This is different from the expenditure review, which shows how much public money will go to fund certain departments, decentralized governments and services, such as the NHS.

The budget is read in the House of Commons by the Chancellor of the Exchequer. This will be Rishi Sunak’s second budget as Chancellor.

Mr Sunak’s first in March last year was dubbed the ‘coronavirus budget’ after focusing on providing financial support for the British during the crisis, rather than the government’s ‘leveling’ program as promised in the 2019 general election.

Normally the budget is kept once a year but the unprecedented circumstances of the pandemic in 2020 saw Mr. Sunak give a “mini-budget” to the Commons on July 8.

Mr Sunak said the policy would give people who cannot afford a large deposit the option of buying their own home.

He added: “As the Prime Minister said, we want to turn Generation Rent into Generation Buy.”

This gives a boost to Brits who find it difficult to pool their savings to buy their own home, as these types of mortgages are deemed riskier by banks.

Currently, there are only a handful of mortgages with a 5% deposit available, which increases costs for buyers who are more likely to strike a deal with a deposit of 10% or more.

Many lenders have pulled these mortgages in the wake of the coronavirus pandemic – there were only eight with a loan-to-value ratio (LTV) of 95% in January 2021, according to the Treasury.

The move has seen many young buyers shut out of the property market as they compete with soaring house prices that exceed wages.

The mortgage guarantee program was first mentioned at the Conservative Party’s virtual conference last year.

The Prime Minister outlined his plans to turn ‘generation rent’ into ‘generation purchase’, and said the program could help mend the ‘broken housing market’ which had taken a hit because of Covid.

The managing director of online mortgage broker Trussle, Ian Larkin, said the government’s mortgage guarantee program was “good news for buyers,” especially because it is not limited to new construction.

But he said there could be a “danger” that the program will increase demand and inflate house prices.

He added: “In addition, those who earn lower wages, as well as those who live in areas with high house prices, may still not meet the affordability requirements of lenders to get a higher loan, despite a 5% deposit. “

Budget 2021 – Chancellor Rishi Sunak announces extension of stamp duty holiday extended until September

You can check out all of the budget announcements made today on The Sun’s Budget live blog.

The purchase assistance program has been extended again to prevent thousands of first-time buyers from missing out on housing.

Here are six tips for finding the best mortgage for you, including lenders offering “no deposit” loans.

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