New 5% Deposit Mortgages Announced in the Budget

4th March 2021

The Government has announced a plan to guarantee mortgages with five per cent deposits, encouraging banks to lend to those with smaller savings pots.

In the Budget on 3 March 2021, Chancellor Rishi Sunak confirmed that the Government would back the home loans, which will be available on homes costing up to £600,000.

This new scheme will begin in April and will be available on new mortgages taken out until 31 December 2022. People from all parts of the UK including Scotland will have access to them.

The mortgages will be available to both first-time buyers and home movers.

The Government said buyers will be able to fix their rate for 'at least' five years should they want to do so.

Banks and building societies are not obliged to offer the mortgages, but the Chancellor said in his speech that several have already committed to do so.

House prices increased by 8.5 per cent in 2020, reaching a record high of £252,000, according to the ONS.

As ever affordability is the key message. Taking on a debt is no small matter and even with help the debt will for many be too much.