5% Deposit Mortgage Scheme Now Permanent – Act Before Market Shifts

Contractors, first-time buyers, and self-employed professionals — this one’s for you. The 95% mortgage guarantee scheme is no longer temporary. From July, it becomes a permanent part of the UK housing market.

A major policy shift is arriving this summer: the UK Government has confirmed that the Mortgage Guarantee Scheme will be made permanent starting July 2025. Originally launched as part of Help to Buy in 2013 and reintroduced in 2021, the scheme encourages lenders to offer 95% loan-to-value mortgages. It works by providing a government-backed guarantee on the portion of the loan between 80% and 95% — giving lenders more security, and buyers more options. The scheme had been set to expire this month, but this announcement secures its future as a core mechanism to help low-deposit buyers enter the housing market. For contractors and professionals with complex income, this could open new doors.

Sarah Thompson, Managing Director of Mortgage Scout, says: “Although mortgage rates are now starting to fall, the size of the deposit remains the biggest challenge for most buyers. A permanent guarantee scheme could bring much-needed consistency to the market and give both lenders and borrowers greater confidence.” Industry experts agree this move signals a renewed focus from the government on supporting first-time buyers — particularly those with smaller deposits and less conventional income types, such as contractors, freelancers, and self-employed professionals. The news follows earlier consultations with lenders in 2024, and while full rollout details are expected in July, the policy direction is clear: low-deposit borrowing support is back on the agenda, and this time it’s here to stay.