Launched in April 2021, the scheme protects lenders against losses when lending to first-time buyers and movers with low deposits.
It enables buyers to put down five per cent of the total value of a home worth up to £600,000 as a deposit, while the remaining 95 per cent is covered by a mortgage.
The initiative, launched during the pandemic as lenders cut back on low-deposit loans, is designed to help households with good credit who are struggling to save for high deposits. It offers a financial guarantee to lenders on a portion of the mortgage.
The scheme was originally due to run until the end of December 2022 but ministers have now delayed closure until the end of 2023.
Chief Secretary to the Treasury, John Glen said: “For hard-working families facing today’s challenging economic conditions, it is right that we continue to help them secure their first home or move into their dream house.
“Extending this scheme means thousands more have the chance to benefit, and supports the market as we navigate through these difficult times.”
The Government added the scheme has helped over 24,000 households get on the property ladder so far, with 85 per cent of buyers being first-time homeowners.
Trinity Finance advisor, Amit Patel said: “This is a much-needed policy announcement that will enable buyers with a smaller deposit to get onto the housing ladder in the turbulent times we are going through. It would have been naive to withdraw the scheme given the dip in housing activity and the prevailing sentiment that house prices will drop in 2023/2024.”