The stamp duty holiday, announced in July 2020, created a very active property market – benefitting buyers of all types. But with transactions hitting a 13-year high – and demand pushing prices up – it meant that the first-time buyer market suffered.
In fact, it contracted by 12% between July-December, due to rising house prices and a mortgage ‘crunch’, with many 90% and 95% mortgages being pulled from the market.
But 2021 looks like it’s set to be a better year for first-time buyers, with a gradual slow-down in demand expected once the stamp duty holiday has tapered off.
Simultaneously, the government has announced measures to bring 95% mortgages back to the market. The mortgage guarantee scheme will see the government offer lenders a guarantee when they offer mortgages to people with a 5% deposit.
This means that mortgages will, once again, be available where you can borrow 95% of the house price, with a deposit of 5%. It will be available from April 2021-December 2022.
It’s also positive news for the supply of homes, with experts predicting that there will be a surge of new properties hitting the market over the next few weeks.
To be eligible for the scheme you will need to:
- Apply for a residential mortgage, not a second home or buy-to-let
- Be taken out by an individual or individuals rather than an incorporated company
- Be on a property in the UK worth less than £600,000 or less
- Have a loan-to-value between 91 and 95 percent
- Be originated between the dates specified in the scheme
- Be a repayment mortgage and not interest-only
- Meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage, such as a loan-to-income and credit score test.
Lots of main lenders have already committed to the mortgage guarantee scheme – contact us to find out your options:
How KB Mortgage Services can help:
Note: Your home may be repossessed if you do not keep up repayments on your mortgage
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