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Budget Boost for Edinburgh Home Buyers

Posted by Barry Burton on March 4, 2021
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UK Govt releases new 5% deposit scheme

Full details of the new scheme, which will allow buyers to borrow up to 95%, have now been released. 

High loan-to-value deals have been getting scarcer and scarcer since the start of the pandemic, leaving many in Edinburgh unable to get on to the property ladder. 

Rishi Sunak has promised to turn “generation rent” into “generation buy”. 

How will the new scheme work? 

The Government view is that the current scarcity of high loan-to-value lending is primarily a response to the pandemic rather than a symptom of a longer-term structural change in the mortgage market. 

The aim is for the mortgage market to guarantee the provision of options for consumers with smaller deposits who also want a mortgage with the security of predictable repayments for a longer period.

As such, Mr Sunak is making it a requirement that any lender participating in the scheme must offer a five-year fixed rate product as part of their range of mortgages offered under the guarantee.

Under the initiative, the Government would compensate the mortgage lender for a portion of the net losses suffered in the event of a repossession.

For further details can be found here

Who can apply?

Most importantly, the scheme will be available to all buyers, not just first-time buyers. Given the price point for both types of buyers in Edinburgh, this will be very useful indeed. 

A mortgage that’s eligible for the guarantee under the new scheme will have to: 

  • Be a residential mortgage (not for a second home) and not buy-to-let. 
  • Be taken out by an individual or individuals rather than an incorporated company. 
  • Be a property in the UK with a purchase value of £600,000 or less. 
  • Have a loan-to-value of between 91% and 95%. 
  • Be a repayment mortgage, and not interest-only. 
  • Meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage – for example a loan-to-income and credit score

When does this all start?

The scheme is intended as a temporary measure. It will be open for new mortgage applications from April 2021 to December 2022 

A large number of high street banks have confirmed they are participating with more expected to follow suit.

The mortgage will be available on both new-build and existing homes.


This will be a particularly important boost in Edinburgh as the LBTT Holiday looks set to end without an extension. 

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