End of the Mortgage Guarantee Scheme: What’s Next for Homeowners?

The government-backed Mortgage Guarantee Scheme, launched in April 2021 to help buyers with smaller deposits get onto the property ladder, is set to end on June 30th, 2025. Since its launch, the initiative has helped over 53,000 households secure a mortgage, with an impressive 86% of them being first-time buyers (Mortgage Solutions).

For anyone unfamiliar with the scheme, it worked by allowing lenders to offer 95% loan-to-value (LTV) mortgages by providing a government guarantee on the higher-risk portion of the loan (between 80% and 95%), reducing the potential losses for lenders if borrowers were unable to repay and making higher LTV lending more accessible.

While the scheme is now closed to new applications, the government has promised to replace it with a “new, permanent, and more comprehensive mortgage guarantee initiative,” aimed at continuing support for aspiring homeowners.

So, what does the end of the mortgage guarantee scheme mean for homeowners and would be first time buyers moving forward? We look ahead to how you best prepare for the planned changes.

What the End of the Mortgage Guarantee Scheme Means for First Time Buyers and Homeowners

1. Changes to Accessing Low-Deposit Mortgages

With the current Mortgage Guarantee scheme coming to an end and a new, more permanent scheme due to launch in July 2025, ,lenders may adopt a more tailored criteria for 95% mortgages. While this could mean a bit more diligence is needed to secure a mortgage with a smaller deposit, it also promotes responsible lending that supports a healthier and stable housing market – benefitting both borrowers and homeowners in the long-term.

For homeowners, this shift could and should help reduce risky lending, lowering the chance of sudden price corrections and promoting long-term market stability – good news if you’re looking to preserve or grow your property’s value.

2. Remortgaging Will Require More Forward Planning

Homeowners approaching the end of their fixed-rate mortgage, particularly those with higher loan-to-value (LTV) ratios, should plan ahead to secure the most competitive remortgage deals. With lenders placing greater emphasis on affordability, early preparation is essential. The scheme, which is expected to stay open to those remortgaging residential property, as well as first time buyers seeking to join the property ladder should see an increase in the number of higher LTV mortgages but many will be taking stock of their financial health whilst details are still unclear. If you’re looking to stay ahead here are just a few things you can do today: 

• Review your current equity position
• Organise your financial documents
• Speak to a mortgage broker to understand current lender criteria

Taking a proactive approach ensures you’re in the strongest position when it’s time to renegotiate or switch deals – maximising your chances of securing favourable terms. 

We work with a trusted network of mortgage advisors everyday, providing personalised support tailored to your goals. Contact the team to find out more.

3. Who’s Eligible for the New Mortgage Guarantee Scheme?

The 2025 Mortgage Guarantee Scheme is designed to unlock homeownership for a wider group of buyers — especially those struggling to save a large deposit.

If you’ve got between 5% and 9% of the property price saved, this scheme could help you access a mortgage of up to 95% loan-to-value (LTV). It’s an important move in supporting buyers who are ready to step onto — or move up — the property ladder, but have been held back by rising rents or limited savings.

Here’s who qualifies:

• First-time buyers
  The scheme is particularly supportive of those buying their first home, with lenders able to offer high-LTV mortgages more confidently.
  
• Existing homeowners and home movers
  It’s not limited to first-time buyers — anyone purchasing a main residential home can apply, provided they meet the deposit requirements.
  
• Buyers purchasing a property up to £600,000
  The scheme covers properties valued up to £600,000, which includes a wide range of homes across the UK.
  
• Applicants with a 5–9% deposit
  The key eligibility requirement is a low deposit — between 5% and 9% of the property’s value. Mortgages must therefore be between 91% and 95% LTV.

Who isn’t eligible?

• Buy-to-let investors
  The scheme is only for buyers purchasing a property to live in — not for rental investment purposes.
  
• Second-home buyers
  You must be buying a primary residence. Purchases of second homes, holiday lets, or overseas buyers are excluded.
  
• New-build flats (in some cases)
  Some lenders may exclude certain new-build properties or flats — eligibility can vary by lender, so it’s important to check the details before applying.
  

What else do I need to know?

While the scheme reduces risk for lenders, standard mortgage criteria still apply — including affordability checks, income verification, and credit history. The scheme doesn’t remove these requirements; instead, it helps lenders offer products they may have otherwise withdrawn from the market.

4. Focus on Affordability for Homeowners

Lenders are placing more emphasis on affordability checks, carefully assessing income, outgoings, and credit history. This focus ensures borrowers can comfortably manage repayments even amid fluctuating interest rates.

For both buyers and remortgagers, now is an ideal time to review your finances:

• Reduce unsecured debt
• Improve your credit score
• Consider boosting your deposit to access better rates

Homeowners who demonstrate strong financial health will continue to have access to attractive mortgage deals when remortgaging or seeking new financing options but as Rachel Reeves said in her 2025 Spending Review the goal is to “‘ensure the consistent availability of mortgages for buyers with small deposits’.

5.  A Stronger, More Confident Market Backed by Government Stability

Rather than phasing out support, the government is doubling down with a new, permanent Mortgage Guarantee Scheme from July 2025. This move signals a long-term commitment to boosting homeownership while reducing the uncertainty of short-term interventions.

For homebuyers and homeowners alike, this means a more stable lending environment, improved access to low-deposit mortgages, and greater confidence in long-term investment decisions. By embedding this scheme into the core of the housing market, the government is aiming to build a foundation for sustained, predictable growth.

Download the 2025 UK Property Market Forecast to stay informed and ahead of the market trends.

What Existing Homeowners Should Know

Although the Mortgage Guarantee Scheme is ending, if you purchased your home under it, here’s what you need to know:

• Your mortgage terms remain unchanged and valid.
• You won’t be affected unless you choose to remortgage or move.
• Lenders may conduct more thorough equity and affordability assessments when you remortgage.

To enhance future borrowing opportunities, consider making regular overpayments and monitoring your loan-to-value ratio closely.

Government’s Next Steps: What Homeowners Should Watch Out For

The government has pledged a “new, permanent, comprehensive mortgage guarantee scheme” designed to open the door wider for young families and hardworking renters. Though no details have been released yet, the promise signals continued support for affordable homeownership in the long term.

What Buyers and Homeowners Can Do Now

• Boost Your Deposit: Even a small increase in your deposit can significantly improve your mortgage terms.
• Explore Alternative Support: Take advantage of existing schemes like the Lifetime ISA and Shared Ownership as valuable paths to homeownership.
  Seek Expert Guidance: Mortgage brokers can help you navigate the evolving lending environment and find the best deals.
  Maintain Financial Stability: Keeping a solid credit score and stable income is key to securing favourable mortgage offers.
  

What Are the Alternatives to the Mortgage Guarantee Scheme?

Even though the scheme has ended, several government-backed initiatives continue to support homeownership, especially for first-time buyers:

1. Affordable Homes Programme

A landmark £39 billion, 10-year initiative announced in the latest Spending Review, aims to deliver hundreds of thousands of new social and affordable homes across the UK.

• Backed by a 10-year rent settlement of CPI + 1%, giving housing providers stable, predictable income.
• Creates new opportunities for private investors, developers, and housing associations through long-term partnerships.
• Envisions a collaborative housing ecosystem where public funding, institutional capital, and developer expertise work together to expand access.
• Offers potential lower-cost finance through Homes England and repositions affordable housing as critical infrastructure.

1. Lifetime ISA (LISA)

• Save up to £4,000 annually with a 25% government bonus.
• Can be used towards the purchase of a first home up to £450,000.
• Available to those aged 18 to 39.

2. First Homes Scheme

• Offers new-build homes at a discount of 30% to 50% for eligible buyers.
• Targeted at key workers and local first-time buyers.
• Resale of homes must maintain the discount to keep them affordable long term.
  

3. Shared Ownership

• Purchase a share (usually between 25% and 75%) of a property and pay rent on the rest.
• Option to staircase and increase your ownership over time.
• Suitable for buyers unable to afford full market prices.
  

4. Help to Build (for Self and Custom Builders)

• Offers equity loans to individuals building their own homes.
• Aimed at increasing housing supply and providing more affordable options.
  

Looking Ahead: Why Choose Centrick Land, New Homes & Invest?

At Centrick Land, New Homes & Invest, we don’t offer financial advice — but we do offer something just as valuable: a trusted network, an extensive portfolio of homes, and a team of experts who know the market inside out.

Whether you’re buying your first home, upsizing, or building your investment portfolio, we’re here to guide you through the process — helping you understand your options, connect with the right professionals, and find a property that fits your goals.

What we offer:

• Access to a wide range of homes — including off-market opportunities and exclusive developments.
  
• Honest, experienced guidance to help you navigate changing market conditions.
  
• A personal, partnership-led approach — we take the time to understand what matters to you.
  

Get in touch with the Centrick Invest team today and discover how we can help you move forward with clarity and confidence.