Important considerations if you are sharing a house with your partner. #solicitors #cohabitation #family #lawyers
Do you know where in the world your investments are? #investments #lawyers #cornwall #probate #solicitors
The terms libel, slander and defamation are often used interchangeably in everyday use. But what do these terms ac…
Whilst most powers of attorney appoint family members, there are times when a professional may be a better choice…

Buying your first home with a small deposit

According to the Bank of England, the biggest issue for most first-time buyers is insufficient savings.  Last year saw a sharp jump in the average amount of a deposit required to get a mortgage, with some people having to provide a deposit equivalent to a full year’s salary.

To help tackle this problem, the Government is introducing a new mortgage guarantee scheme until December 2022. Here Claire Wicks in the residential conveyancing team with Parnalls, looks at the latest proposal and other ways to help you buy your first home even if you only have a small deposit.

 The 95 per cent mortgage guarantee scheme

During the pandemic, lenders have tended to ask for large deposits and 95 per cent mortgages have virtually disappeared. The new mortgage guarantee scheme, announced in the Spring Budget, is designed to encourage lenders to start offering higher loan-to-value mortgages.

Under the scheme, the Government will guarantee that part of your mortgage which is over 80 per cent of the purchase price, thereby making the loan less risky for the lender.

If you default on your mortgage payments, the lender may ultimately sell your property. With a 95 per cent mortgage, there is a higher risk the sale proceeds will not cover the outstanding loan if property values fall. If you cannot make up the difference, then ordinarily the lender will suffer the loss.

Under the new scheme, the Government will compensate the lender for up to 15 per cent of the original purchase price (the borrower’s deposit covering the first five per cent).

The mechanics may sound complicated, but you do not need to worry too much about them: it will be down to individual lenders to develop and administer mortgage products which meet the Government’s detailed criteria. Most major banks have already said they plan to launch 95 per cent mortgage deals, with other lenders likely to follow suit.

To benefit from the scheme, you must satisfy certain conditions as a borrower. For example, you must:

  • be buying your main home, not a holiday home or a buy-to-let investment;
  • be buying a property in the UK for £600,000 or less;
  • borrow between 91 per cent and 95 per cent of the purchase price;
  • meet standard borrowing requirements to prove you can afford the repayments; and
  • take out the loan during the term of the scheme, between April 2021 and December 2022.

It is expected that first-time buyers will find it easier to secure finance for a home purchase even with a small deposit.

Some words of caution

You should always consider carefully how any funding arrangements would apply to your personal circumstances, and a 95 per cent mortgage may not be the best option for you.

A high loan-to-value mortgage generally means paying a higher rate of interest, so always shop around and take independent financial advice before signing up for a deal. The new scheme guarantees the lender against loss, not you as the borrower.

As with any mortgage, if you cannot keep up the repayments, you risk losing your home and will still have to pay your lender’s costs. So, it is vital to check you can afford the repayments even if your circumstances change or interest rates go up.

You should also think about what could happen if property prices fall in the future. With only five per cent equity in a property, you could end up in negative equity. Negative equity is when your home is worth less than your outstanding loan. Being unable to pay off your mortgage out of the sale proceeds could stop you moving home in the future. You may also find your options to remortgage reduced, leaving you having to pay a higher rate of interest.

 Consider the alternatives

If you can afford it, and you think your income is stable or will increase in the future, then a 95 per cent mortgage may still be an attractive option. Even so, it is worth considering some of the alternatives.

Help to Buy

A Help to Buy equity loan is a government scheme which could help you buy a new home with as little as a five per cent deposit. Unlike the mortgage guarantee scheme, you typically only borrow 75 per cent of the purchase price from a commercial lender. The remaining 20 per cent is funded by an equity loan from the Government. You must pay this back when you sell, but the repayment would be based on 20 per cent of the sale value of your home. So, you could end up paying more, or less, than under a conventional arrangement depending on whether house prices go up or down.

Saving for a larger deposit

Saving for a larger deposit may mean delaying your home buying plans, but it could give you a wider choice of properties and mortgage products. It may also reduce the risk of negative equity. Using a Lifetime ISA could help you save towards your first home in a tax efficient way with the Government contributing up to £1,000 each year.

Shared Ownership

Shared Ownership is another affordable home ownership scheme. You buy a share in a property, usually from a housing association, and pay an adjusted rent on the rest. When you can afford it, you may buy additional shares until you own your home outright.

Help from family and friends

Sometimes parents or other family members may offer to help with a gift or loan, or by acting as guarantors. However, this type of assistance needs careful consideration so that everyone is clear on the tax and legal implications.

Buying with others

Pooling resources with a partner or a friend is another possibility, but you must agree how you will share responsibility and ownership of the property. You will also need to decide what should happen in the future, for example, if one of you wants to sell.

If you are buying a property jointly, or with help from someone else, always discuss your intentions with your solicitor. They can ensure the legal documentation protects your interests. This will allow you to enjoy your new home in the way you planned and avoid any disputes in the future.

 How we can help

Buying your first home is a milestone, one of the biggest financial and emotional commitments you will ever make. So, it is important to choose a solicitor you can be confident in, someone who can give your purchase the individual attention it deserves.

We can navigate all the legal aspects of your purchase and support you on your journey to home ownership.

For further information, please contact Claire Wicks in the residential conveyancing team on 01566 772128 or email

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.


Valuing an estate for probate

Do I need a cohabitation agreement?

Have you had an accident involving a horse?

Planning, Construction & Development

Preparing to sell your Launceston property

The Need for Updating Wills

Debt recovery and how we can help

Claiming compensation for a serious road traffic accident

Planning Disputes

Residential Sale and Purchases

Information to gather for your probate solicitor

Accidents, Compensation & Personal Injury

Property Disputes

What type of will do I need?

Had an Accident in Someone's Home?

Ten common debt recovery mistakes

How to choose an executor to administer your estate when you die

The ultimate personal injury and accident claim checklist


Putting your legal affairs in order

Your responsibilities when you have people working in your home

10 reasons to appoint a Personal Injury solicitor

The risks of DIY probate

Does your lawyer progress your accident claim efficiently and provide you with a personal and professional service? Can I change solicitors for my accident claim?

Why you should always use a solicitor to prepare your will

Five problems with a leasehold property

Making a will when you retire

Employment Disputes

Buying your first home with a small deposit

Site assembly for commercial development

Meeting your conveyancing solicitor, what you need to prepare

Landlords’ options for enforcing commercial tenants’ obligations

Untangling Overseas Assets


Do you know the difference between…

When to consider appointing a professional attorney

Should I get a cohabitation agreement?

The Right to Make Noise

Ill-health pension transfer not liable for IHT

Legal Time Limits - why so important?

Would you pay a premium for a south-facing garden?

Video-witnessed wills to be made legal

New Planning Relaxation Is Not the Whole Storey

How to minimise delays in obtaining Grant of Probate

Could you benefit from the Green Homes Grant?

A SHOCK TO THE SYSTEM: new electrical safety regulations for residential tenancies

Property of Cornish residents who die without a will goes to Prince Charles

What effect could the new changes to stamp duty have on property sales?

Staying safer in video meetings

Making Sure Your Great New Home Comes With Clean Air

Property Market Re-Opens in England

Coronavirus: Wills and Powers of Attorney FAQ

Medical Care Received Not Up to Scratch?

Accident or Injury Involving a Dog?

Social Distancing No Obstacle for Parnall's Mobile Document Signing Team

Coronavirus (COVID-19) and Commercial Property Legal FAQs

Rent Charge Suspensions: Protecting Your Interests

Been Asked to Sign an Employment Settlement Agreement? Seek Advice Urgently...

Services Update: Continuity of Legal Service Provision

Advising You in Uncertain Times

Coronavirus Update

Could carelessness on social media land you in court?

Is an electronic signature on a commercial property document acceptable?

What happens when there is no health & care LPA in place

Social Media Training for Businesses

Gazundering, what it is and how to avoid it

Relief from forfeiture – what happens if the tenant forgets to pay the rent?

Not so safe at work - compensation for an accident at work

New organ donation law: giving you control

Running a business from home

Have nude photos of you or your teenager been posted online?

Landowners’ rights and the Electronic Communications Code

Building in your back garden

Christmas is a time for giving (and inheritance planning)

Buying the freehold of your leasehold house

Redeveloping an empty pub for commercial use

Why it takes time to obtain the Grant of Probate

Social Media: The unconscious privacy threat

Is your reputation being threatened?

Making a will after your spouse or partner has died

Interns celebrate completion of internship at solicitors

Selling your home in a flat market, some top tips

New Media and Communications Court list reflects surge in internet defamation claims by Laura Baglow

Has your personal information been shared without your permission?

Planning your escape to the country, what you need to consider – part 2

Government consultation on new national model for shared ownership

Choosing a partnership structure

Planning for what happens when you die by Deborah Adams

Changes to legislation could offer protection for tenants in the private rental sector

Move to the country - Part One

Will your septic tank still be legal in January?

The death knell for ‘kiss and tell’?

Selling your property at auction

Not looking so good - your guide to compensation for botched non-surgical cosmetic procedures

New threshold of seriousness in defamation proceedings

Legal considerations when building a granny annex

Choosing the right person for your power of attorney

Formal Interviews - Do you need legal representation?

Privacy rights and aerial images

Trustees’ duty to give information to beneficiaries

Taking your first commercial lease

Is your organisation protected from employee social media legal risk?

Have you been targeted by negative social media posts?

Farmers be alert when being inspected

Help for House Sellers?

Don’t let your digital assets end up in a digital grave

Development proposals and your local authority search

What can you do if your child is injured in a serious accident

NetRights welcomes new protection for social media users


Supreme Court recognises that social media is a “casual medium” in libel battle

Choosing the best conveyancer who is right for you

Making a will after a second or subsequent marriage

Option or promotion agreement – which is best for landowners?

Anonymous pub and restaurant online reviews leave a bad taste

Help to Buy – beware of some cracks in the structure

Understanding Lasting Powers of Attorney

Changes to Energy Performance Certificate for Landlords

Had a cycling accident? Your route to obtaining compensation

New year, new home: tips to sell your home in the New Year 

Tax Planning for your inheritance

Hearing loss: when your employer may be liable

Buying a home for your retirement, five things you need to consider

Farmers plan to diversify after Brexit

Ministers press ahead with probate fee shake-up - reports BBC News

Botched dental treatment? You may be entitled to compensation

Why a Health and Welfare Power of Attorney is a good idea

Will the new charge on building developments in Cornwall affect you?

Energy Performance Certificates – Do They Matter?

HMRC Challenging Stamp Duty Land Tax Payments

Ben Mitchell qualifies as a solicitor

The potential implications of Brexit on employment law

Appointing a guardian for your children

Houses in multiple occupation – new rules from October 2018

New Agriculture Bill published

Will Brexit affect my pension?

Dreaming of a holiday home? Sort out the legals before putting your feet up

Lasting Power of Attorney by Deborah Adams

Settled status after Brexit by Alexis Hager

How overage agreements can boost profits from your land

Top tips for first-time buyers

How Could Brexit Affect My Farm?

Wills & Succession in Spain by Deborah Adams

Brexit ­– an international and local view by Alexis Hager, Litigation

Capital gains tax - important facts for non-residents of the UK

Buying a home: the importance of making sure the seller is entitled to sell

Changing a will after someone has died: it is possible and it could save you money

Sad passing of Battle of Britain pilot who served with Parnall family member

Considerations when buying a heritage property

Disciplinary proceedings at work: guide for employers

Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.

Selling your land through a conditional contract

How to extend a lease on a flat or buy a share of the freehold

Delayed Health Checks

New Marketing Team at Parnalls Solicitors Ltd

Social media: snooping in the recruitment process

A landlord's guide to tenant alterations

Equity release, your questions answered

Short term lettings: avoiding the pitfalls

How to apply for a grant of probate

Are you entitled to a fee refund for your Lasting Power of Attorney?

What to do when someone dies

Business disputes: can they ever be avoided?

Accident at work: what to do and when if you have been injured

Director appointment

Business rates: a financial ticking time bomb (Part 2)

Conveyancing quotes: what you need to know

New appointment in Litigation

Mental Health - we can get you the help you need

Business rates: a financial ticking time bomb (Part 1)

Leaving a gift to charity in your will

Parnalls helps two leading Devon organic meat companies to become one

Katherine Flashman Kitson is appointed Governor of St Joseph's School, Launceston

Financing your home purchase (Part 2)

New rules on debt recovery may delay payment of consumer debts

Making financial gifts during your lifetime (Part 2)

Our Guide to Lasting Powers of Attorney for Your Business Interests

Financing your home purchase (Part 1)

Careless replies to pre-contract commercial property enquiries could land you in trouble

Making financial gifts during your lifetime (Part 1)

Property referrals and recommendations - what to consider

World Alzheimer’s Day: Three-step plan to get your legal affairs in order

Legal considerations when setting up a business (Part 2)

How to avoid falling victim to property fraud

What are the key terms that need to be covered in a commercial lease? Part 3

Top 10 reasons to use a solicitor to make your lasting power of attorney

What legal considerations do I need to think about when setting up a business? (Part 1)

Why you need to update your will as soon as you decide to separate or divorce

What are the key terms that need to be covered in a commercial lease?  Part 2

The Bank of Mum and Dad: top tips when lending money to your children  


The importance of insurance when life trips you up

The role of a court appointed deputy

What are the key terms that need to be covered in a commercial lease?

How do I know if my relative has the mental capacity to make a will?

Motorcycle accidents - what to consider when claiming compensation

Top tips for pushing your house purchase through as quickly as possible

How does the new inheritance tax perk work?

Jargon-busting guide to Lasting Power of Attorney

What happens when mum or dad are ill and can’t make decisions?

How firms can take advantage of the rise of alternative finance

Should Stamp Duty be abolished?

Teenager paralysed after falling off a horse awarded £3 million in compensation

RBS to pay investors £800 million

Not happy with your accident claim lawyers?

Parnalls expands its litigation team

Hard work pays off for our Trainee Legal Executive.

Katherine Scott Flashman Kitson celebrates 20 years

How will the new Residence Nil Rate Band (RNRB) affect you?

Exciting new business hub unveiled in North Cornwall

Be careful what you post on Facebook

Parnalls rolls out the support at Wadebridge Wheels

New trainee solicitor appointed

Mark Parnall comments on Brexit in The Law Society Gazette