Homeowners and new buyers can get 5% deposit mortgages from today
It's part of a new Government guarantee scheme
Last updated 24th May 2022
You could now get a mortgage with a 5% deposit as part of a new Government-backed scheme which see's high street lenders offer the low-deposit loans.
The scheme, which was initially announced in the 2021 Budget, aims to help first-time buyers get their foot on the property ladder.
It comes as house prices across the UK increased by almost £7,000 in the space of a month.
Who can get a 5% deposit mortgage?
The scheme is available to anyone buying a property up to £600,000, including both current homeowners and new buyers.
However, the scheme is not available to those buying a second home or a buy-to-let property.
According to the Government, 69% of private renters said low-deposit mortgages were hard to find.
Miguel Sard, managing director of home buying and ownership at NatWest said: “A Government-backed scheme will help segments of the market for whom home ownership has felt far out of reach in recent months.”
Which lenders offer the scheme?
Lloyds, Santander, Barclays, HSBC UK and NatWest are among the first lenders to offer the low-deposit mortgages, with Virgin Money set to follow next month.
How easy will it be to secure a low-deposit loan?
Lenders will continue to carry out affordability checks, which includes reviewing your income and spending.
This means that people who have become recently unemployed or who have an unsteady income could still struggle to secure a mortgage.
What else was announced in the 2021 Budget?
Furlough extended until end of September
Chancellor Rishi Sunak confirmed that the furlough scheme has been extended until the end of September 2021, in order to try and protect as many jobs as possible. Government contribution to the scheme will begin to lift from July, when employers will be expected to pay 10% of their employees wages for hours not worked. This will increase to 20% in August and September. Employees will continue to receive 80% of their wages for hours not worked until the scheme ends in September.
Stamp duty holiday extended
The current stamp duty holiday which is in place has been extended until the end of June. This means that until the end of June, anyone in England and Northern Ireland buying property up to £500,000 will not have to pay any stamp duty. Those paying over £500,000 for property are taxed based on their value. From June to September, only those paying over £250,000 for a property will have to pay stamp duty.
Fuel duty freeze to continue
Fuel tax has been frozen for a tenth year in a row as part of the budget. For the past ten years, fuel duty has remained at around 58p per litre.
Continued freeze on alcohol taxes
So-called "Sin Taxes" on alcohol are always part of the budget. The freeze of tax on spirits, beer, wine and cider in last year's budget is continued this year.
Freeze to income tax
The Chancellor also announced a freeze on income tax. Currently, individuals earning more than £12,500 per year are taxed on their income. This will be raised to £12,570 next year, which will remain at this level until April 2026.
95% mortgages
The Chancellor announced a new 5% deposit home loan guarantee scheme as part of an attempt to boost the housing market. It will be available to both current homeowners and first-time buyers purchasing property up to £600,000. Many mortgage providers will offer 95% mortgages.
Cash grants for self-employed
Over 600,000 more self-employed workers are now eligible for cash grants. Now that the tax return data is available for the last tax year, thousands more people have access to these grants, a large proportion of whom became self-employed in 2019/20. Two more self-employed grants have been announced, meaning that people can claim up to 80% of three month's average profits up to £7,500.
£300 million for World Cup bid and sports
A £300 million package is available to a variety of sports, a sector which has been negatively impacted by the social distancing regulations. Football, cricket, tennis and horse racing will all get a chunk of this package. The Chancellor has pledged money towards a joint bid by the UK and Ireland to host the 2030 football World Cup.