Labour’s Freedom to Buy mortgage guarantee scheme (permanent)

Labour has confirmed a permanent version of the UK mortgage guarantee approach commonly associated with high loan-to-value (LTV) lending. The scheme is branded Freedom to Buy and is designed to help first-time buyers, home movers and some remortgagers access mortgages when deposit savings are tight.

This page explains what the scheme is, how the government guarantee works behind the scenes, the headline limits that are commonly reported, and practical points to consider.

Note: Mortgage guarantees work through lenders. Availability and the exact terms you can get will still depend on the lender’s own criteria and the specific mortgage product.

What is the Freedom to Buy mortgage guarantee scheme?

Freedom to Buy is a government-backed mortgage guarantee intended to support lenders offering high-LTV mortgages (commonly described as 91%–95% LTV).

In simple terms, the scheme is meant to reduce the risk to lenders when they provide mortgages with a smaller deposit. That can help more borrowers find mortgage options that would otherwise be less widely available.

How the mortgage guarantee works (behind the scenes)

You don’t apply to the government guarantee directly. Instead, the guarantee is arranged through participating lenders.

A typical way these schemes operate is:

• A lender provides a mortgage where the borrower’s deposit means the loan is in the high-LTV range.
• The lender purchases a guarantee that covers part of the lender’s potential losses if the worst happens.
• The guarantee is intended to encourage lenders to offer these products more readily.

Key eligibility limits (headline rules)

While lenders will still apply their own affordability and lending criteria, Freedom to Buy has several scheme-level limits that are important to understand.

Deposit and LTV

• Deposit: 5% to 9%
• This corresponds to 91% to 95% LTV mortgages.

Property type

• The mortgage must be for a primary residence.
• The scheme is not intended for buy-to-let or second homes.

Property value cap

• The property price must be £600,000 or less.

Who can use it

Freedom to Buy is aimed at:

• First-time buyers
• Home movers
• Remortgaging a main home

Guarantee timeframe

• Guarantees are typically arranged for up to seven years from the start of the mortgage.

Why the scheme was introduced

The core barrier the scheme targets is the deposit hurdle. When house prices rise faster than savings, many buyers struggle to reach the deposit level that would normally unlock a wider range of mortgage products.

A government guarantee can help support the availability of high-LTV lending, particularly when lenders become more cautious.

What Freedom to Buy could mean for borrowers

Potential benefits

• Lower deposit requirement: access to mortgages in the high-LTV range (commonly 91%–95% LTV).
• More mortgage availability: the guarantee is intended to encourage lenders to keep offering high-LTV options.
• More routes to ownership: it can help buyers who are mortgage-ready in terms of income and affordability, but not yet deposit-ready.

What to watch out for

A mortgage guarantee scheme doesn’t change the fundamentals of borrowing. Points to consider include:

• Higher borrowing can cost more: high-LTV mortgages often carry higher interest rates than lower-LTV deals.
• Affordability still matters: lenders will assess income, outgoings, credit history and overall affordability.
• Market risk remains: if property values fall, borrowers could face negative equity risk.
• It doesn’t solve supply pressures: deposit support can help individuals, but it doesn’t directly address wider housing supply and pricing.

How the scheme fits into the home-buying process

For most buyers, the journey looks like a standard mortgage application—what changes is the type of mortgage product you may be able to access.

In practice, the process is usually:

1. Prepare your deposit (within the 5%–9% range).
2. Get a mortgage assessment through a lender or broker.
3. Look for a high-LTV mortgage that is supported by the Freedom to Buy guarantee.
4. Complete the full application and affordability checks.
5. Proceed to offer and completion if approved.

Other low-deposit options that may be relevant

Freedom to Buy isn’t the only way to buy with a smaller deposit. Depending on your circumstances, other routes may be worth considering alongside it.

• High-LTV mortgages outside the guarantee: some lenders offer high-LTV products without the scheme.
• 100% mortgages: these can exist in limited circumstances, but they may come with stricter requirements and/or higher costs.
• Shared Ownership: can reduce the upfront deposit and monthly commitment compared with buying outright.
• First Homes and other government schemes: may support buyers in specific situations.
• Lifetime ISA (LISA) savings: can help boost funds for eligible purchases.

Bottom line

Freedom to Buy is a permanent mortgage guarantee scheme aimed at supporting high-LTV lending for primary residence purchases up to £600,000, with deposits of 5%–9%.

For first-time buyers, home movers and some remortgagers, it may widen the range of mortgage options available when deposit savings are the main obstacle. As with any mortgage, the key is to balance the opportunity of a smaller deposit against the long-term cost of borrowing and the lender’s affordability assessment.