5% Mortgage ending 2025 / Labour Freedom to Buy Scheme

AbbieL

Hello There! 

My name is Abbie (28) me and my husband are looking at buying our first home in October 2025. I am aware that the 5% mortgage scheme ends in June 2025. I know that Labour is introducing a new scheme called 'Freedom to Buy'. Could anyone tell me if this is a similar scheme/ Would we still be able to buy a house with a 5% deposit in October 2025, this prospect of this not being available is scary! 

Thank you 

ACG

You can buy with a 5% deposit without using any schemes. 

But the government announced some big numbers for homes getting built. Removing anything that helps get house builders building is going to make that tast even harder so I would imagine there will be something around. 

AbbieL

Thank you for that. 

So am I correct in thinking the scheme of 5% mortgages is ending in June 2025 but the process of buying a house with a 5% mortgage is still available? 

What are the purposes of the schemes if you can still buy a house with 5% 

Altior

The schemes are essentially about protecting the lender, ie cover them for the risk of offering high LTV mortgages. What could possibly go wrong!

Lenders can offer 95% LTVs if they like, it just means there is more risk of a loss to them in the event of repossession/negative equity. These schemes mean that the risk is transferred to the state/taxpayer. 

It looks like Labour's proposal is simply a rebadging of the mortgage guarantee scheme. However, it doesn't appear to be imminent. 

ACG

They all started after the recession in 2008. House prices dropped massively in some areas. trying to get a mortgage even in 2011 (when I first became a broker) was quite hard. 

The government basically set up HTB which was like an insurance policy for lenders. Some lenders took up the government on the offer, others didnt and offered their own 95% products. That is still the case today. The schemes on offer are only for new builds, where as other "normal" 95% mortgages are available for non new builds.