The UK’s mortgage guarantee scheme, which launched in April 2021, was introduced to encourage lenders to offer 95% loan-to-value (LTV) mortgages — enabling buyers to purchase a home with just a 5% deposit.

More than 53,000 mortgages have been completed using the scheme since its launch, with 86% of those supporting first-time buyers.

How the scheme worked

The mortgage guarantee scheme allowed lenders to purchase a government guarantee covering the portion of a mortgage between 80% and 95% of a property’s value.

If a borrower defaulted and the property was repossessed, the government would compensate lenders for that high-risk slice of the loan.

This reduced lender risk and encouraged more 95% mortgage products to remain available in the market, particularly during periods of economic uncertainty.

However, not all lenders offering 95% mortgages relied on the scheme.

Between launch and December 2024:

  • Over 53,000 mortgages were completed using the scheme
  • The total value of guarantees issued reached £1.6bn
  • The overall value of supported mortgages stood at £10.7bn
  • The average property value purchased through the scheme was £211,000

What happens now?

The scheme is open to new home loans only until 30 June 2025.

Earlier this year, the government announced plans to introduce a “new, permanent, comprehensive mortgage guarantee scheme” intended to provide long-term confidence for lenders and support home ownership among younger buyers and renters.

However, at the time of writing, no detailed framework or launch date has been published.

This creates some uncertainty in the low-deposit mortgage market.

Why this matters for first-time buyers

For many aspiring homeowners, particularly those struggling to save larger deposits while paying high rents, 95% mortgages represent one of the few viable routes onto the property ladder.

If lender confidence weakens without a replacement scheme:

  • The availability of 95% products could tighten
  • Rates on high-LTV deals could rise
  • Eligibility criteria may become stricter

That said, some lenders offer 95% mortgages independently of the scheme, and overall market competition remains active.

The broader mortgage context

The scheme was introduced during the economic uncertainty following the pandemic, when lenders had pulled back from higher-risk lending.

Today, the mortgage market is operating in a different environment:

  • Interest rates remain above pre-2022 levels
  • Competition between lenders has improved product choice
  • Affordability remains stretched for many buyers

Whether a permanent scheme is introduced could influence long-term confidence in low-deposit lending.

What this means for buyers now

If you are considering buying with a 5% deposit:

  • Availability may vary between lenders
  • Rates at 95% LTV are typically higher than lower LTV deals
  • Government support mechanisms may change later this year

The absence of detailed information about a replacement does not mean 95% mortgages will disappear, but policy clarity could affect lender behaviour.

This article provides general information, not personal advice. Mortgage suitability depends on individual circumstances, including income, deposit size and affordability.

Exploring your options

If you are planning to buy with a smaller deposit, it may help to review what 95% mortgage products are currently available and how eligibility criteria apply to your situation.

You can explore available mortgage options to understand how deposit size affects borrowing terms.
(Exploring options provides information only and does not constitute financial advice or a recommendation.)