Permanent Mortgage Guarantee Scheme Eligibility & Application Process
Here’s a detail explaining the full eligibility criteria and application process for the UK’s permanent Mortgage Guarantee Scheme, started from July 2025.
Permanent Mortgage Guarantee Scheme: UK
Starting July 2025, the UK Government will introduce its permanent Mortgage Guarantee Scheme, offering 91-95 % loan-to-value (LTV) mortgages so borrowers may put down as little as 5 % deposit. This change brings greater certainty for first-time buyers and home movers who may struggle to save for larger deposits. Below is a detailed look at who qualifies, what the criteria are, and how you go through the application process.
Eligibility Criteria
To be eligible for a mortgage under this scheme, applicants must meet all the following conditions:
- Main residence only: The property must be your primary home in the UK. The scheme cannot be used for second homes or buy-to-let investments.
- Deposit requirements: You must have between 5 % and 9 % deposit, meaning your mortgage must be between 91 % and 95 % LTV.
- Repayment mortgage only: Interest-only mortgages are not eligible. The loan must be a repayment mortgage.
- Property value cap: The property must be worth £600,000 or less unless any future update lifts the limit.
- Standard affordability checks: You must pass your lender’s credit, income and affordability assessments as normal.
- Who can apply: Both first-time buyers and home movers are eligible- ownership history doesn’t disqualify you so long as the home will be your main residence.
People Also Read: Permanent Mortgage Guarantee Scheme Q1 Report
How the Application Process Works
1. Select a lender or broker
You don’t apply to the government directly. Instead, you approach a participating lender offering 95 % mortgage deals backed by the scheme. Not all lenders who offer 95 % mortgages use the government guarantee, so always confirm whether the deal is scheme-backed.
2. Mortgage in Principle (MIP)
Next, obtain an Agreement in Principle from your lender. This indicates how much they might lend you and signals seriousness when making offers on properties.
3. Full application
After your offer is accepted, submit a full mortgage application. Your lender will verify:
- That your deposit is between 5 % and 9 %
- That the property value is within the scheme cap (typically £600,000 or lower)
- That you meet affordability and credit criteria
Once approved, the lender will accurately arrange the government guarantee behind the scenes. You have no extra paperwork to complete for the scheme itself.
4. Completion
If everything checks out, the mortgage finalises and the property completes. You take ownership and begin your repayment schedule. The government guarantee remains in place to protect the lender’s interest, not yours personally.
Eligibility & Process: Quick Summary
| Step | Details |
|---|---|
| Initial check | Save 5 %–9 % deposit, view homes ≤ £600,000, main residence only |
| MIP stage | Secure an Agreement in Principle with a participating lender or broker |
| Application | Confirm deposit size, property eligibility, repayment mortgage status, pass affordability |
| Government backing | Lender handles guarantee; no direct contact needed from you |
| Completion | Finalise mortgage; start repayments; guarantee applies behind the scenes |
Key Points & Tips
- You cannot apply directly to the scheme. It works through lenders and mortgage brokers who handle all arrangements.
- The government guarantee is capped in liability at £3.2 billion and must be paid for by participating lenders in fees, meaning taxpayers are protected.
- While the scheme makes low-deposit mortgages more accessible, interest rates may still be higher than for larger deposits due to lender risk perceptions.
- The scheme is part of a broader governmental effort to enhance mortgage access, including plans to reform lending rules, stress tests, and include rental payment history in affordability assessments.
From July 2025, the permanent Mortgage Guarantee Scheme allows qualifying borrowers to buy a main residence with as little as 5 % deposit, backed by government support. As long as you meet the deposit, property value, mortgage type, affordability, and borrower status rules, all steps- from offer to completion- are handled through lenders, not by applying separately. While the scheme can unlock access, you still must pass standard checks and may face higher rates compared to larger deposit lending.
