Deposit Unlock is a new scheme to help first time buyers and home movers buy a new build home with a 5% deposit. Check out our guide to ensure it is the right option for you.
With the new Deposit Unlock scheme, first time buyers and home movers can buy a new build home with just a 5% deposit.
You can only buy a home from a house builder participating in Deposit Unlock (see a list below) and using a mortgage offered by a participating lender (currently Newcastle Building Society and Nationwide).
Mortgage lenders are often stricter on the amount they are willing to lend on the purchase of new builds. This is to protect themselves from the inevitable devaluation of the property in the early years and other risk factors. As such, they often set the minimum deposit for new build properties at 15% or even 25%.
Deposit Unlock gets round that and allows you to buy a new build with just a 5% deposit. With Deposit Unlock, the house builders pay to insure the mortgages instead. And they use some of the money from selling the homes for this purpose; the aim is to make lenders more comfortable about offering high LTV mortgages on new builds.
This scheme is exclusively for new build homes.
And the maximum loan you can take out to buy a property through this scheme is currently £750,000. Although this depends on the lender and your circumstances.
To be eligible, you’ll need to find a new build home offered under the Deposit Unlock scheme with one of the following participating home builders:
There are currently only a few mortgage providers under the Deposit Unlock mortgage scheme: Nationwide, Newcastle Building Society and Accord.
When the government backed equity loan scheme comes to an end in 2023 we expect Deposit Unlock will see a lot of interest.
And unlike the government scheme, there aren’t additional affordability stress tests when taking out a mortgage, which factor in the servicing of the Help to Buy loan after the first five years.
Any scheme that can help people buy a home with a small deposit is worth looking into. However, it’s important to think about the limitations too. These include:
According to Rightmove House Price Index , new seller asking prices rise by 0.5% (+£1,950) this month to £368,231. Although newly advertised property prices typically rise at this...
According to Rightmove House Price Index , In a month of subdued housing market activity, the average asking price of newly marketed properties increases a little to £366,281 (+0.4%)....
According to Rightmove House Price Index , The average price of property coming to market drops by 0.2% (-£905) this month to £371,907, marginally below the 0% norm for this time of...