Glossary · UK
What is Mortgage Guarantee Scheme?
A government-backed guarantee enabling lenders to offer 5% deposit mortgages to buyers with smaller deposits.
Full Definition
The UK Mortgage Guarantee Scheme allows lenders to offer 95% loan-to-value (LTV) mortgages on residential properties up to £600,000, supported by a government guarantee that covers part of net lender losses above a set threshold. This reduces the risk to lenders and widens access to home ownership for buyers who can only afford a 5% deposit. The scheme does not reduce the mortgage repayment amount or subsidise the interest rate; buyers still pay standard market rates. It is available to first-time buyers and home movers on their primary residence. The scheme has been extended and renewed several times since its 2021 launch and remains a policy tool to support the housing market alongside initiatives such as the Help to Buy equity loan.