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Help to Buy Mortgage Guarantee Scheme to be Closed by the Government at the End of the Year

14 October 2016


  • Help to Buy mortgage guarantee scheme which launched in 2013 is due to close at the end of 2016
  • Government claim that the scheme “is no longer needed”
  • Other parts of the Help to Buy scheme will continue until 2020

It was revealed that the Mortgage Guarantee Scheme, a part of the wider Help to Buy policy, is due to be closed by the government at the end of the year.

The scheme was introduced in 2013 with the aim of helping potential buyers get onto the property ladder. It consists of  the Help to Buy ISA, shared ownership, equity loan & the mortgage guarantee. The mortgage guarantee part of the scheme runs with the same process as a normal mortgage application would, except that the lender purchases a guarantee on the mortgage loan from the government.

Typically, lenders provide borrowers with low loan-to-value mortages due to the fact that the lower the LTV, the lower the mortgage rate & the cheaper the deal. However the mortgage guarantee scheme allows participating lenders  to offer home buyers mortgages with higher loan-to-value, as the government would pay back the lender if the borrower defaults. 

As more and more private lenders are offering 90% - 95% mortgages, the government claim that the need for schemes like the mortgage guarantee has become obsolete as buyers can borrow almost the full purchase price of a property without a guarantee from the government. As a result by the end of 2016, prospective buyers will no longer be able to purchase via this scheme.   

Nevertheless, the other elements of the Help to Buy scheme such as the ISA & the equity loan scheme will remain in place. Those who already have an ISA open can continue to save into their account past 2019, when the scheme is due to end, but they must claim their bonus by 2030. The equity loan scheme will also continue until 2021. 

According to statistics revealed by HM treasury in June 2016, nearly 79,000 mortgages were completed with the help of the mortgage guarantee scheme. 

Since the announcement of the closing of the scheme, there has been speculation by Mortgage Capacity Assessments in October 206 as to whether lenders will continue with high loan-to-value mortgages. 

For help with finding a small deposit mortgage, it is best to visit a mortgage adviser who can help & guide you through the most convenient & cost-effective route for you.

Visit our recommended mortgage brokerage "Mortgage Choice Services" & book your free appointment with one of their advisers in South Woodford today. | 020 8989 2556 


A broker fee of £299 will be charged upon completion.


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