A 5% deposit does not guarantee that a 95% mortgage is affordable or available. Product criteria, rates and participating lenders change. Your home may be repossessed if you do not keep up repayments.
What the Mortgage Guarantee Scheme does
HM Treasury offers participating lenders a guarantee against part of the loss on an eligible high-LTV mortgage. The lender pays a commercial fee for the cover. The aim is to sustain the availability of mortgages for buyers with a deposit as small as 5% across the UK.
You apply to a lender for a mortgage, not to the government for a separate loan. You remain responsible for the full mortgage debt and normal product terms. The guarantee does not protect your deposit or prevent repossession if payments are not maintained.
Core eligibility in the Treasury rules
| Area | Scheme requirement |
|---|---|
| Loan-to-value | More than 90% and no more than 95% under the Treasury scheme rules. |
| Mortgage structure | A sterling repayment mortgage secured by a first-ranking charge, not interest-only. |
| Borrower and ownership | One or more individuals buying and becoming the sole registered owner or only registered co-owners. |
| Property and use | A residential property in the UK intended for owner occupation, subject to a limited armed-forces exception. |
| Excluded structures | The scheme rules exclude buy-to-let, shared ownership/shared equity, offset and guarantor mortgage loans. |
| Underwriting | The lender must assess affordability, verify income, stress affordability and apply the scheme's credit-impaired-borrower rules. |
These are scheme rules, not a complete mortgage product policy. A participating lender can apply additional income, credit, property, term, loan-size and affordability criteria.
First-time buyers, home movers and remortgages
The government's scheme page says eligible first-time buyers and home movers can use supported mortgages. The detailed rules can also allow specified remortgage types, but each lender notifies the Treasury whether its participation covers new loans, particular remortgages or both. Do not assume a lender offers every transaction type under the guarantee.
Scheme mortgage or ordinary 95% product?
A lender can offer a high-LTV mortgage outside the government scheme. From a buyer's perspective, the important comparison is the mortgage itself: interest rate, product fee, incentives, initial period, reversion rate, ERC, portability, overpayment rules and total cost over the expected holding period.
Ask whether the property type is accepted at 95% LTV. New builds, flats, unusual construction, purchase incentives and valuation results can change the maximum loan even when the applicant passes affordability.
What to prepare for a 95% mortgage
- Confirm the deposit source.
Savings, gifts and scheme funds need an evidence trail and lender acceptance.
- Keep costs outside the deposit.
Budget for legal work, survey, moving, product costs and applicable property tax.
- Test payment changes.
Model the initial payment, a higher rate and the lender's reversion rate.
- Check all three credit files.
Correct factual errors and ask before consenting to a soft or hard search.
- Compare total cost.
A lower rate with a fee is not automatically cheaper for a smaller mortgage.
- Allow for valuation risk.
If the lender values the home below the price, the cash deposit needed can increase.
Compare low-deposit mortgage routes
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