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More Affordable First-Time Buyer Mortgages Could Be On The Way

More Affordable First-Time Buyer Mortgages Could Be On The Way
Mark Langshaw

Author: Mark Langshaw - Content Manager

Updated: June 30, 2022

First-time buyers could soon have access to more affordable mortgages, if new plans the UK Government is mulling over come to fruition.

Housing Secretary Michael Gove is considering measures to make low deposit mortgages available to borrowers who take out an insurance policy when buying their home.

These agreements would involve the homebuyer taking out a form of ‘mortgage guarantee insurance’ that would protect the lender in the event of a default. With this safety net in place, mortgage providers could potentially take more risks with their lending decisions.

“Getting more young people on the housing ladder depends, firstly, on improving their ability to get mortgages. Many people currently renting pay more to their landlord each month than they would need to pay to service a mortgage on the same property,” Gove wrote in the Mail on Sunday.

The plans, which are yet to be finalised, were inspired by a scheme used in the Canadian market. Homebuyers over there are required to take out mortgage guarantee insurance if they are borrowing more than 80% of the property’s value. These policies are offered by the state-run Canada Mortgage Housing Corporation as well as two private insurance providers.

Pete Mugleston, Online Mortgage Advisor’s managing director, has welcomed the proposals and is hoping that they will complement the existing support for first-time buyers.

“Any measures that will help more people get onto the property ladder are very welcome from our perspective, and it’s good to see the government looking closely at what’s working in other countries and asking whether it could be a solution on these shores too,” he said.

“One thing I’d like to stress, though, is that first-time buyers who are struggling to save a deposit shouldn’t delay their plans waiting for these proposals to bear fruit. There is already support for those with low deposits, from the Help to Buy scheme to flexible mortgage lenders, so I’d urge anyone in this boat to speak to a broker immediately to find out what their options are.”

You can find out what support is currently available for people buying their first property in our complete guide to first-time buyer mortgages.

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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