The Mortgage Guarantee Scheme to help first-time buyers will be extended by a year to the end of December 2023, the government has announced.
The scheme helps people offer lenders the option to purchase a guarantee on mortgages where a borrower only has a 5% deposit. It compensates lenders for a portion of net losses if the property has to be repossessed.
Launched in April 2021, the scheme has already helped over 24,000 households. It was originally planned to close at the end of this year but will now be extended until the end of 2023.
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“For hard-working families facing today’s challenging economic conditions, it’s right that we continue to help them secure their first home or move into their dream house,” chief secretary to the Treasury, John Glen, said.
“Extending this scheme means thousands more have the chance to benefit, and supports the market as we navigate through these difficult times,” he added.
The scheme was launched by the government in April 2021 after 95% loan-to-value (LTV) mortgages all but disappeared during the pandemic.
The scheme has underwritten £4.4bn in low-deposit home loans since it was launched last year amid fears that first-time buyers could be frozen out of the mortgage market.
To also support people to get onto the property ladder, the government has increased the level where first-time buyers start paying stamp duty from £300,000 to £425,000.
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Also, first-time buyers can get relief on properties costing up to £625,000, as opposed to £500,00 previously. Both of these measures are time-limited to April 2025.
The Treasury said more than 687,000 households have been helped into home ownership through government schemes since 2010.