As the Help to Buy Mortgage Guarantee Scheme approaches its second anniversary, the mortgage market is looking extremely healthy, especially for those who have a five per cent deposit.

The second phase of the scheme was aimed at helping borrowers who had a five per cent deposit to buy a property. It achieved this by providing a guarantee, backed by the government, for 15 per cent of the amount borrowed. Since the introduction of the scheme in October 2013, the market for 95 per cent loan-to-value mortgages has altered immensely. According to Moneyfacts.co.uk, borrowers with small deposits now have lots more choice than previously and also have lower interest rates to choose from.

The finance expert at Moneyfacts, Charlotte Nelson, said that the scheme had been introduced to encourage lenders to offer affordable mortgages to those with five per cent deposits. According to quarterly statistics from HM Treasury, the number of properties being sold, thanks to the mortgage guarantee scheme, has risen to 56,401. Nelson also stated that the average interest rate of mortgage rates fixed for two years had fallen by 0.65 per cent in the last two years.

Although the scheme has livened up the mortgage market for 95 per cent loan-to-value deals, buyers need to be aware of deals outside the Help to Buy scheme, as lenders who operate outside the scheme are offering competitive rates. As borrowers are faced with greater choice of products, they may need to seek professional help from an adviser who has taken a CeMAP course.

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