The Mortgage Guarantee Scheme helps people buy with just a 5% deposit by encouraging lenders to offer 95% mortgages. This guide explains the Mortgage Guarantee Scheme, also known as Freedom to Buy: how it works, who it is for, the property limit, and the pros and cons of buying with a small deposit through it.
What the scheme is
The Mortgage Guarantee Scheme is a government scheme that supports 95% mortgages, meaning you can buy with a 5% deposit. It works by giving participating lenders a government-backed guarantee on part of the loan, reducing their risk and encouraging them to offer low-deposit mortgages. Made permanent in 2025 and sometimes branded Freedom to Buy, it aims to keep 5% deposit mortgages widely available across the UK.
How it works
The scheme works behind the scenes: the government guarantees lenders against a portion of their losses on the part of the loan above 80% loan-to-value, which makes them more willing to lend at 95%. You do not apply to the scheme directly; you simply apply for a 95% mortgage with a participating lender, and the guarantee operates in the background, as our guide to 95% mortgages explains.
The 5% deposit
The key benefit is being able to buy with a 5% deposit rather than the larger sum many low-deposit buyers struggle to save, as our guide to how much deposit you need explains. On a £200,000 home, a 5% deposit is £10,000 rather than £20,000 at 10%. This lower deposit can bring forward the point at which you can buy, though you still need to pass the lender's affordability checks.
The property limit
The scheme supports purchases on homes up to £600,000. This covers most properties across much of the country, though it may be limiting in the highest-priced areas. The home you buy must be within this cap to use the scheme. Knowing the limit helps you check whether a property you are considering qualifies, particularly in expensive locations where prices may exceed it.
Who it is for
The Mortgage Guarantee Scheme is open to both first-time buyers and home movers, not just those buying their first home, provided they meet the lender's criteria and the property is within the price cap. This makes it broader than some first-time buyer schemes. So whether you are stepping onto the ladder or moving with a small deposit, the scheme can help you access a 95% mortgage.
Standard affordability still applies
Although the scheme helps with the deposit, you still go through the normal mortgage process, with the lender assessing your income, outgoings and credit, and the property valued. The guarantee reduces the lender's risk but does not relax affordability checks. So a small deposit alone is not enough; you must also be able to afford the mortgage, as our guide to how much a first-time buyer can borrow explains.
The pros and cons
The main advantage is buying with just a 5% deposit, helping those who cannot save more. The drawbacks of a high loan-to-value are higher interest rates than larger-deposit deals, less equity buffer against price falls, and the risk of negative equity if prices drop, as our guide to Deposit Unlock notes for new-build alternatives. So it helps you buy sooner, but a 95% mortgage costs more and carries more risk.
An example of a 5% deposit
Suppose you want to buy a home for £250,000. With the Mortgage Guarantee Scheme, a 5% deposit would be £12,500, and you would take a 95% mortgage of £237,500. Without the scheme, you might need a 10% deposit of £25,000. The scheme therefore halves the deposit needed in this example, which can bring forward when you are able to buy, provided you can afford the larger mortgage.
Which lenders take part
The scheme works through participating lenders, many of them major high-street names, who offer 95% mortgages backed by the guarantee. Not every lender takes part, and the 95% deals available vary, so it is worth comparing across participating lenders, as our guide to 95% mortgages explains. A broker can help you find the most suitable 95% deal from the lenders offering them under the scheme.
New and existing homes
Unlike some new-build-specific schemes, the Mortgage Guarantee Scheme can be used on both new-build and existing homes, as long as they are within the £600,000 price cap and meet lender criteria. This makes it more flexible than schemes limited to new-builds. So whether you are buying an older home or a new one, the scheme can support a 5% deposit purchase, broadening your choice of property.
The history of the scheme
A mortgage guarantee scheme was first introduced in 2021 to support 95% lending after low-deposit mortgages became scarce, and a new, permanent version was launched in 2025, sometimes branded Freedom to Buy. This permanence aims to keep 5% deposit mortgages reliably available. Knowing the scheme is now a settled, ongoing feature, rather than a temporary measure, gives buyers confidence that 95% mortgages should remain accessible.
Is it right for you?
The scheme suits buyers who can afford the monthly payments but cannot save more than a 5% deposit, and who are buying within the price cap. If you can save a larger deposit, doing so brings a lower rate and more equity, as our guide to deposits explains. So the scheme is a useful route to buying sooner, weighed against the higher cost of a 95% mortgage.
Weighing a 95% mortgage
Buying with a 5% deposit means a 95% mortgage, which carries a higher interest rate and a small equity buffer, so it is worth weighing the benefit of buying sooner against the higher monthly cost and the risk of negative equity if prices fall, as our guide to what loan-to-value means explains. For many, buying sooner is worth it, but going in with eyes open to the trade-offs is sensible.
Always check current rules
As with all schemes, the Mortgage Guarantee Scheme's rules, price cap and participating lenders can change over time, so it is important to confirm the current position before relying on it. Official sources and brokers can tell you the latest details and which lenders are offering 95% deals under the scheme. Verifying the current rules ensures your plans are based on what is actually available when you come to buy.
Used sensibly by buyers who can comfortably afford the payments, the scheme is a valuable route onto the ladder for those whose main obstacle is saving a larger deposit, and its permanent status means 5% deposit mortgages should stay reliably available across the market.
In short
The Mortgage Guarantee Scheme, made permanent in 2025 and also called Freedom to Buy, supports 95% mortgages so you can buy with a 5% deposit on homes up to £600,000. The government guarantees part of the loan to encourage lenders, and it works behind the scenes when you apply for a 95% mortgage. It is open to first-time buyers and movers, but standard affordability applies and high loan-to-value deals cost more.
Where to get help and next steps
Read our guides to government schemes overview, 95% mortgages, Deposit Unlock, and Help to Buy. This is general information, not mortgage or financial advice; scheme rules change, so check current details.