Labour’s Freedom to Buy mortgage guarantee scheme

What is Labour’s “Freedom to Buy” mortgage guarantee scheme?

Labour’s Freedom to Buy is a government-backed mortgage guarantee scheme designed to support people who want to buy with a smaller deposit. It is intended to help first-time buyers and home movers access high loan-to-value (LTV) mortgages—where the loan is a larger proportion of the property price.

The scheme is not a mortgage product you apply for directly. Instead, it works through participating lenders, who may offer certain high-LTV (often 95% LTV) mortgages where the government guarantee is in place.

How the mortgage guarantee works (behind the scenes)

With Freedom to Buy, the government provides a backstop guarantee to lenders for part of the risk on eligible high-LTV lending. In practical terms, that means:

• Lenders may be more willing to offer mortgages where the borrower has a 5%–9% deposit
• The guarantee is intended to support lending at around 91%–95% LTV
• The guarantee is arranged through the lender’s process, not as a separate application step for you

Typical structure (simplified)

Key limits and conditions to be aware of

Freedom to Buy has specific boundaries. While lenders will always apply their own mortgage criteria, the scheme is generally aimed at:

• Deposit range: typically 5% to 9%
• LTV range: typically 91% to 95% LTV
• Property type: aimed at a main residence (not buy-to-let or second homes)
• Property value cap: up to £600,000
• Who it’s for: first-time buyers, home movers, and in some cases remortgagers (where the main residence conditions are met)

It’s also worth noting that not every 95% mortgage will necessarily be supported by the guarantee. The scheme applies to particular products offered by participating lenders.

Who Freedom to Buy may suit

Freedom to Buy is most relevant if you:

• Have saved a smaller deposit and are looking at high-LTV borrowing
• Want to buy a main residence within the property value cap
• Are a first-time buyer or home mover who needs a deposit-efficient route to ownership
• Are considering a remortgage of your main home and the lender/product is eligible

If you already have a larger deposit, are buying an investment property, or are looking above the scheme’s property cap, the guarantee may not be the right fit.

Why the scheme exists

The core issue the scheme targets is the deposit barrier. In many parts of the UK, saving a traditional deposit can be difficult—especially when household budgets are under pressure.

By encouraging lenders to offer certain high-LTV mortgages, Freedom to Buy aims to:

• Increase access to home ownership for buyers with smaller deposits
• Support market continuity, so low-deposit options don’t disappear as quickly when lending conditions tighten
• Help keep more buyers moving, particularly first-time buyers and those upgrading or relocating

Potential benefits (pros) of Freedom to Buy

For the right borrower, the scheme can offer meaningful advantages:

• Lower deposit hurdle: a route to borrowing with a deposit as low as 5% (subject to eligibility and lender criteria)
• More choice of high-LTV mortgages: the guarantee is intended to support availability of around 91%–95% LTV lending
• Greater market stability: a government backstop can help reduce the likelihood of sudden reductions in low-deposit products

What to watch out for (cons and trade-offs)

A smaller deposit can be helpful, but it also comes with trade-offs. Key points to consider include:

• Higher interest rates are common: high-LTV borrowing often costs more than lower-LTV lending
• Higher monthly payments: borrowing more against the property value can increase repayment amounts
• Affordability still matters: the scheme doesn’t remove the need to pass affordability checks
• Property value risk: if prices fall, high-LTV borrowers may face greater exposure to negative equity

Freedom to Buy can open doors, but it doesn’t change the fundamentals of mortgage affordability and long-term risk.

How Freedom to Buy fits into the home-buying process

Because the guarantee is arranged through lenders, the steps you take as a buyer are broadly similar to other mortgage journeys:

1. Assess your deposit and budget (including stamp duty, legal fees, and moving costs)
2. Seek an Agreement in Principle with a lender or through a broker
3. Choose an eligible mortgage product that is supported by the Freedom to Buy guarantee (where applicable)
4. Complete the full mortgage application and provide the required information
5. Proceed to offer and completion as normal

A broker can help you compare mortgages across lenders and identify which options may be supported by the guarantee.

Other low-deposit options to consider

Freedom to Buy is one route into home ownership, but it’s not the only one. Depending on your circumstances, you may also want to consider:

• High-LTV mortgages outside the guarantee: some lenders offer high-LTV products without the scheme
• 100% lending (where available): typically limited and often comes with stricter conditions or higher costs
• Other government or shared-ownership style options: depending on eligibility, these can help reduce the deposit burden

Comparing the full range of options can help you understand the total cost and the risks you’re taking—not just the deposit level.

Summary: is Freedom to Buy right for you?

Freedom to Buy is a government mortgage guarantee scheme intended to support high-LTV lending for main residence purchases—particularly where a 5%–9% deposit is available.

It may be worth exploring if you’re a first-time buyer or home mover looking at around 91%–95% LTV mortgages within the £600,000 property cap. However, it’s important to weigh the potential trade-offs, especially around interest rates, monthly affordability, and property value risk.

If you’d like to understand how the scheme could interact with the mortgages available to you, the most useful starting point is to compare lenders and products that may be supported by the guarantee—alongside alternatives that could suit your deposit, income, and long-term plans.