What is the Mortgage Guarantee Scheme?

a woman signing paperwork

The scheme is aimed to increase the appetite of lenders to lend at higher loan to value. Since the pandemic, lenders have restricted the availability of low deposit mortgages mainly due to an anticipation that house prices would slump as a result of the Corona Virus impact.

A similar scheme launched in 2013 following the financial crisis in 2008 was a success and this scheme appears to mirror the characteristics of that of 2008.

Scheme Mechanics

The Government will give lenders the option to purchase a guarantee on the “top slice” of the mortgage.  This means that the Government will compensate the lender for a portion of the net losses suffered in the event of repossession.  Lenders will also take a 5% share of those net losses. The guarantee will be valid for up to seven years after the mortgage originated, as evidence shows that after this period loans are less likely to default. The lender will pay a commercial fee to the Government for each mortgage in the scheme. Additionally, the scheme will be administered by National Savings and Investments on behalf of the Treasury. There is a cap on the Government’s contingent liability under the scheme of £3.9bn.

Eligibility for the Mortgage Guarantee Scheme

Below we have listed the criteria required to be eligible for the latest scheme:

  • Owner occupier mortgage only (not second homes or buy to let)
  • Only available to individuals and not an incorporated body
  • UK property only up to a max purchase price of £600K
  • Have a loan to value between 91-95%
  • Be originated in the scheme between April 2021 and December 2022
  • Only repayment and no interest only
  • Meet standard affordability tests and credit score passing – not suitable for clients with credit problems

Our Thoughts on this Scheme

The scheme will certainly benefit first time buyers and continue to stimulate the housing market, allowing chains to form for next time buyers. We may find the benefits regionalised, with particular benefit for lower cost housing. A consideration would need to be made to the size of the mortgage given such a small deposit, for example – a £300,000 2 bedroom flat in South London would require a mortgage of £285,000 which based on an income multiple of 4.5x, a single applicant would need to earn in excess of £60,000.

We asked Robin Hawke, Partner at Hawke Financial Services, for his opinion on the scheme given the current state of the property market and projected forecasts for changes in the coming months.

With the polarised affects of lockdown on different business sectors the property market has continued for those unaffected by the Covid measures. The government scheme can only help subsist in the aftermath of the pandemic. Whilst it won’t help everyone it most certainly will have some positive effects on preventing a property price slump and feeding the wider economy.

Get In Touch For More Information on the Mortgage Guarantee Scheme

To find out more about the Mortgage Guarantee Scheme get in touch with a member of our team today.

Alleviating the Pressures of Purchasing a First Property

two people the process of signing a document

Buying a home is a very emotionally stressful experience and using a broker to alleviate the pressures involved can be helpful. The pressure involved in buying a property may be induced by the following factors of purchasing via Help to Buy (HTB):

·        Obtaining your Authority to Proceed

·        Having a valuation done

·        28-day exchange period

·        Paying your searches fees

At Hawke, we will be able to help you with all of the above and give impartial advice where we are not affiliated with a particular developer. The advice given is based on your best interests. We have highlighted these particular areas as we commonly come across them while dealing with HTB purchases and we have specialist brokers who can assist you with managing the process.

Obtaining your Authority to proceed

At the same time as submitting your mortgage application you will need to apply for your ATP. This is the approval from HTB that you are eligible for the government equity loan. To achieve this you have to navigate the processing with Help to Buy which is a part of the process we will assist you with.

It is particularly important that all of the documents you obtain match up with one another so the Reservation Form, UK Finance Disclosure Form and the Property Information Form all reflect exactly the same information.

We have brokers on hand that are dealing with Help to Buy and we assist with the application for the ATP. Gathering the relevant documents can be stressful as this is where mistakes can appear.  For example but not limited to; not including the full address correctly; differences between the required forms around costs such as service charge; wrong address or miss spelling of solicitors.

These, amongst other scenarios where the build and completion date are not included, are frequent. It is only when you are exposed to the process that you can identify these issues that will invariably slow the process down for you in obtaining your ATP.


We are unlimited to first charge intermediary lenders and have extensive experience in dealing with them on a day-to-day basis. We can give you a sound indication of how long it will take to have a valuation booked in and this is sometimes demanded by agents to be carried out within seven days.

We will then help you with the outcome whether it be positive or negative and most importantly establish whether it is wise for you to invest in the property.

Instances which we see are paying a large sum of money for a magnificent new property, however, the new build warranty provider is only acceptable to a handful of lenders. In addition to this, there are circumstances where the property is above a commercial premise which limits the lender availability. With both of these examples, limitations become apparent when it comes to the ability to resell the property and this has a direct impact on you and your investment.

Choose Hawkes Financial Services for Your Mortgage

If you have experienced any of the above or would like to establish your purchase capacity, please call one our fees free brokers at Hawke to help with your property aspirations. You can contact our Help to Buy specialist broker, Adam Hollidge directly on 0208 660 8613 or 07453574724.

Mortgages Using the Help to Buy Scheme – It’s All in The Affordability

small wooden houses representing purchasing property

Purchasing a first home is an exciting and nerve racking process all wrapped into one and the  Government’s Help to Buy initiative is an incentivising way for first time buyers to get onto the property ladder. Establishing which home and mortgage is right for you all lies in the affordability of the property. In addition to this, there are a number of variables to factor in when considering using the Help to Buy scheme. Here, we provide insight into the Help to Buy scheme and the Mortgage Comparison Table that we use when helping you to secure your mortgage.

What are the variables of the Help to Buy scheme?

Variables are inclusive of:

·        Your salary and household income

·        Unsecured credit commitments

·        Service charge and ground rent of the property

·        Equity loan monthly repayments

With further considerations of:

·        Your age affects the achievable overall length of the mortgage, otherwise referred to as ‘the term’

·        Your deposit amount available – which can be more than 5%

·        Which lenders will consider your income most favourably – this is an area we can establish for you as we are unlimited to first charge lenders, we can approach

Finally, with all variables being considered, can you still borrow enough, or do you need to compromise in some way to achieve your overriding objective?

Property expectations dependent upon household income

In our previous Help to Buy blog, we established how the Help to Buy scheme can help you and now. The image below is a visual representation of various levels of income and what the property expectations would be for each tier of financial investment.

* All based on a term of 30 years; £150 service charge; 5% purchaser deposit only; 20% equity loan.

The narrative this portrays is that based on the various levels of income, there should likely be a home out there that is available for you to purchase. Although, considerations around the duration of commuting to work and distance from friends and family may mean that you decide to hold on until your income or deposit increases, in turn expanding your value capacity and the property you can choose from.

Our process for your initial mortgage application

Considering your scenario, we would run through a Mortgage Comparison Table for whichever is most applicable in order for you to consider all avenues and ensuring the most cost-effective means of purchasing a house was achieved. An example of our Mortgage Comparison Table is below:

We can assist you with your Help to Buy mortgages

Ultimately, the key thing to review when looking to invest in the Help to Buy scheme is the best option moving forward that enables you to purchase a new home with confidence and positivity. Our mortgage brokers at Hawke Financial Services would be happy to run through your mortgage enquiry and inform you of the details of the Help to Buy scheme. Get in touch with us today to speak to Adam Hollidge, our Help to Buy specialist.

Common Mortgage FAQS

mortgage faqs

Whether you are thinking about buying your very first property or you are planning on moving up the property ladder, you will probably have to think about taking out a mortgage. Though most people have a vague idea of what a mortgage is, very few fully understand how they work and why most buyers need one. To help you out, we have answered some of the most frequently asked mortgage questions.

Mortgage FAQs You Want Answered

  • What Is A Mortgage? – There are very few people out there who have the money to buy a property outright, which is why mortgages are extremely popular. A mortgage is a type of loan that is taken out to buy property or land. It is secured against the value of the property or land being purchased until the total amount is paid off. 
  • Are There Different Types of Mortgages? – Yes, there are two main types of mortgages. A Fixed Rate Mortgage offers a fixed interest rate for a predetermined period of time, which is usually two or five years. The repayments you make do not change until this period of time comes to an end. A Variable Rate Mortgage offers a varying interest rate, which means that the repayments you make can change over time. 
  • How Much Can I Borrow? – There is no set amount in regards to how much you can borrow for a mortgage, as lenders calculate things differently and have a slightly different approach. Lenders will calculate how much you can borrow using the cost of the property you want to buy, how much you have as a deposit, your income and what you can realistically afford.
  • How Long Does a Mortgage Last? – The length of a mortgage depends on how much you borrow in the first place and what you can afford. If you borrow less and pay off a lot each month, you may only have a mortgage for a short amount of time. This is because you will pay off the loan quickly. If you borrow more and your repayments are relatively low, you will have the mortgage for a lot longer as it will take longer to repay the loan.

At Hawke Financial Services, we are on hand to guide you through the sometimes complex mortgage process. If you have a mortgage question you need answered or you need professional mortgage advice, you can rely on us. Contact us today to speak to an expert.

The Difference Between Life Insurance & Critical Illness Cover

critical cover blog

Though life insurance and critical illness cover are both there to help loved ones financially when you are no longer able to, there are significant differences. Understanding these differences can help you to decide whether you need life insurance, critical illness cover or both. 

Should You Choose Life Insurance or Critical Illness Cover?

  • Life Insurance – The aim of life insurance is to protect your loved ones financially should you pass away, at which time a claim can be made and the agreed sum would be paid out. The amount paid out often relates to your annual income and it can be used to repay debts, such as a mortgage. It is there to ease the financial challenges loved ones are likely to face without your income. With a designated payout, life insurance can also take care of your dependants and their future. Life insurance payouts go to the beneficiaries detailed in the policy and you can stipulate the percentage that beneficiates will receive. Life insurance policies are fairly broad and there are very few scenarios where claims would be unsuccessful.
  • Critical Illness Cover – Life insurance focuses on what would happen in the event of your death, but critical illness cover focuses on what would happen in the event of a critical illness. The aim of critical illness cover is to cover the loss of your income and any debts whilst you recover. It can be used to pay for medical treatment, as well as any home renovations needed to aid with your recovery. Whereas life insurance covers a wide range of instances where death may occur, critical illness cover is not quite as broad. Critical illness cover is only paid out if you are diagnosed with an illness outlined in the policy, such as cancer or a stroke, and different policies cover different illnesses. As a critical illness payout is paid whilst you are still alive, you have full control over how the funds are used.

If you are unsure about whether to choose life insurance or critical illness cover, discuss the options with your insurance broker. An insurance broker can help to determine whether you need life insurance, critical illness cover or a policy with both. At Hawke Financial Services, our experts are on hand to offer professional and accurate advice. Contact us today to speak to an insurance broker. 

Do I Need Life Insurance?

life insurance blog

A lot of people make the mistake of assuming that they do not need life insurance, but there are undeniable benefits for everyone. Even those who are young, single and without a mortgage should consider life insurance. The death of a loved one brings with it a lot of difficulties, whether the death is unexpected or not, and many of these are financial. With a life insurance payout, the financial struggles of losing a loved one are eased. Rather than being faced with unforeseen financial burdens, loved ones can focus on mourning.

The Benefits of Life Insurance

  • Financial Security For Loved Ones – We all have people that we care about and leaving them behind is a big worry for many. Life insurance can help them out financially once you are gone, which gives you one less thing to worry about. Life insurance payouts can provide a great deal of financial security for loved ones, such as your partner or children, and can help to ease unexpected financial strains.
  • Compensate For Lost Earnings – The loss of a vital income can put a huge financial strain on those left behind, but life insurance can help to compensate for this. A life insurance sum can go a long way towards helping loved ones out when they are suddenly faced with one less income. Rather than worrying about having to cope with lost earnings they can rely on life insurance. 
  • Peace of Mind – Nobody likes to think about what will happen after they have gone, especially when it comes to loved ones and how they will cope financially. Life insurance can provide much needed peace of mind. You can relax knowing that your loved ones are taken care of financially even when you are no longer here.
  • Help With Debts and Mortgages – Though you may be gone, your unpaid debts and mortgage will sadly remain. This can put a definite financial strain on loved ones, especially if they are not able to cover the costs themselves. Life insurance can be put towards these costs, helping loved ones to pay off your debts completely. 

Though life insurance may seem like a confusing and daunting thing to organise, it doesn’t need to be. At Hawke Financial Services, we are here to guide you through the process. Contact us today to speak to an expert. Find out how life insurance can benefit you and your loved ones.