The short answer: no. A 95% mortgage describes the amount you borrow compared with the price of the home. The Mortgage Guarantee Scheme is a Government-backed arrangement designed to help participating lenders keep some low-deposit mortgages available.
What a 95% mortgage means
If a home costs £200,000 and you borrow 95% of the price, the mortgage would be £190,000 and the deposit would be £10,000. This percentage is called loan-to-value, often shortened to LTV.
A 95% mortgage is still a mortgage from a lender. The lender decides whether it is prepared to lend, based on its criteria, affordability checks, your credit history and the property.
What the Mortgage Guarantee Scheme does
HM Treasury says the permanent Mortgage Guarantee Scheme helps sustain the availability of 91% to 95% LTV mortgages offered by participating lenders. The Government provides a guarantee to the lender against part of potential losses on qualifying mortgages.
It is not an extra deposit, an equity loan or a separate payment you receive. You do not apply to the Government for the guarantee in the way you would apply for a mortgage; the participating lender offers the qualifying mortgage.
How it differs from Your First Home
Your First Home is a separate proposed equity-loan scheme. As announced, it is expected to combine a 2.5% deposit, a 20% government-backed equity loan and a mortgage for an eligible new build in England. The final rules are still due at the Budget.
That is why two people can both say they are using a Government-supported route while talking about very different arrangements.
