Just 25% of London adults believe that the government’s mortgage guarantee scheme could apply to them, reveals a new poll of 2,000 UK adults.

The government’s mortgage guarantee scheme, announced in the 2021 Spring Budget, helps first-time buyers and home movers to secure a mortgage with a deposit as small as 5%. The scheme applies to homes valued at up to 600,000, with the government promising to cover a portion of the losses a lender might incur in the event of a borrower failing to repay the mortgage. Many lenders, including major high street banks, are currently offering mortgages to eligible buyers with just a 5% deposit. Mortgages are an important part of housing life, almost all homebuyers can not buy their home outright so they have to go for a mortgage to help them buy their home. This is where wholesale mortgage bankers are used so that brokers can offer mortgages to these buyers for their chosen homes.

However, this new research shows some doubt as to the number of people who might choose to take advantage of the scheme. It also reveals that 71% of adults in London feel that they do not have a good grasp of the full support available to help them get on the property ladder. There are a number of other government-backed schemes designed to help young home movers and first-time buyers, such as Help to Buy and Shared Ownership.

“While government-backed 95% mortgages have been welcomed by many, our research suggests that its benefits may not yet be widely known among potential buyers,” comments NerdWallet’s Senior Mortgages Expert, Richard Eagling. “Although not right for everyone, the scheme is a significant development for those who would otherwise be unable to put down a larger mortgage deposit – meaning that many who are unaware of it could miss out on getting a foothold on the property ladder.

“Building a decent deposit is one of the biggest challenges home buyers face, and this has only become more difficult as house price growth has rocketed over the last year. Mortgages that are offered at 95% loan-to-values are something of a lifesaver for many borrowers, but if the new mortgage guarantee scheme is going to succeed then more needs to be done to raise awareness of how it works and who could be eligible.”

The new research study also highlighted other important knowledge gaps about mortgages among young people (between 18 and 34 years old) in the UK, which could be driving misconceptions about how to get on the property ladder.

For example, just 17% of under 35s across the UK understood that first time buyers may not need to pay stamp duty. 19% did not know that mortgage lenders can consider day to day spending habits in mortgage applications. 26% of those living in London said that they would trust mortgage information from unofficial online forums, such as Quora, Yahoo Answers or Reddit.