Most working age adults unaware they may be eligible for 95% Uk Government mortgage scheme

By Linda Howard

Just 15 per cent of working age people believe that the UK Government’s mortgage guarantee scheme could apply to them, reveals a new poll of 1,222 UK adults aged between 18 and 54.

The study for independent price comparison website NerdWallet also found that only one in five (22%) young people under 25-years-old) believe that the scheme could be relevant to them.

The Uk Government’s mortgage guarantee scheme, announced in the 2021 Spring Budget, helps first-time buyers and home movers to secure a mortgage with a deposit as small as 5 per cent. The scheme applies to homes valued at up to £600,000, with a promise to cover a portion of the losses a lender might incur in the event of a borrower failing to repay the mortgage.

Many lenders, including major high street banks, are currently offering mortgages to eligible buyers with just a 5 per cent deposit.

However, this new research shows some doubt as to the number of people who might choose to take advantage of the scheme.

It also reveals that 78 per cent of working age people feel they do not have a good grasp of the full support available to help them get on the property ladder.

Commenting on the findings, NerdWallet’s Senior Mortgages Expert, Richard Eagling, said: “While UK Government-backed 95% mortgages have been welcomed by many, our research suggests that its benefits may not yet be widely known among potential buyers.

“Although not right for everyone, the scheme is a significant development for those who would otherwise be unable to put down a larger mortgage deposit - meaning that many who are unaware of it could miss out on getting a foothold on the property ladder.”

He continued: “Building a decent deposit is one of the biggest challenges home buyers face, and this has only become more difficult as house price growth has rocketed over the last year.

“Mortgages that are offered at 95% loan-to-values are something of a lifesaver for many borrowers, but if the new mortgage guarantee scheme is going to succeed then more needs to be done to raise awareness of how it works and who could be eligible.”

The new research study also highlighted other important knowledge gaps about mortgages among young people (between 18 and 34 years old), which could be driving misconceptions about how to get on the property ladder.

For example, 19 per cent did not know that mortgage lenders can consider day-to-day spending habits in mortgage applications. A further 23 per cent said that they would trust mortgage information from unofficial online forums, such as Quora, Yahoo Answers or Reddit.

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