Help to Buy: Mortgage Guarantee - Mortgages - Guides |

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Help to Buy: Mortgage Guarantee

Category: Mortgages
Author: Tim Leonard
Updated: 03/04/2017

Phase two of the Government's Help to Buy scheme was officially launched in October 2013 and ceased at the end of 2016. No new Help to Buy Guarantee mortgages can be taken out.

This part of the scheme aimed to help borrowers with at least a 5% deposit secure a 95% loan-to-value (LTV) mortgage from participating lenders on a new-build or existing home up to a value of £600,000.

Under the scheme, the Government offered mortgage lenders the option to purchase a guarantee of up to 15% on mortgages.

Because of this support, participating lenders were able to offer more mortgages to borrowers with small deposits.

How it worked

Participating lenders paid the Government a fee in return for them guaranteeing a percentage of the mortgage. This meant lenders were more comfortably able to offer borrowers mortgages of up to 95% LTV.

For example:

How did it differ from phase one?

This scheme was very different to the first phase of Help to Buy, which sees the Government provide borrowers with an equity loan of up to 20% of the property's value.

Find out more about Help to Buy: Equity Loan in our guide

Under the second phase, the Government simply acted as guarantor on eligible mortgage products, and wasn't directly involved in providing finance.

What Next?

More information on phase one of Help to Buy mortgages - Equity Loans

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.