The £12bn scheme is designed to stimulate the house building market by helping thousands of people buy a home of their own.

High Street banks including Natwest, RBS, Halifax and Bank of Scotland will start offering new Help to Buy mortgages this week.

And today Virgin Money has also confirmed they will participate in the scheme, and will be offering new guaranteed mortgages to borrowers in the New Year.

Natwest and RBS customers will be able to start the process of applying for a mortgage today, with other banks to follow in the next few days.

The Help to Buy: mortgage guarantee is aimed at thousands of people frozen out of the housing market because they cannot afford large deposits of up to 20% of a property’s value.

It means someone trying to buy a £200,000 house currently needs to save up a deposit of £40,000.

Leading banks will offer a range of new Help to Buy mortgages – up to 95 per cent of the property’s value – for homes worth up to £600,000.

Under the scheme, buyers will only need a deposit of as little as 5%.

Depending on the size of deposit, the government will then guarantee up to 15% of the property’s value, in return for a fee from the lender.

Lenders can start offering the mortgages now, and they will be guaranteed by the government from January 2014.

David Cameron said: “Moves such as Help to Buy will also encourage house building. If potential buyers can’t buy, builders won’t build – so this is an important part of unlocking the market.

Too many hardworking people are finding it impossible to buy their own home – people who can afford the monthly mortgage payments but haven’t got rich parents and can’t pay the deposit up front.

“Our Help to Buy Equity Loans, have already helped over 15,000 people buy a new home. But we’ve got to go further and finish the job we’ve started.”