Deposit Unlock explained

Deposit unlock is one of the latest schemes introduced to help first-time buyers and home movers buy a new build property with just a 5% deposit. But what does it mean, and is it the right home-buying scheme for you?

What is the Deposit Unlock scheme?

The deposit unlock scheme allows you to purchase a new build home with just a 5% deposit.

Despite the scheme being in its early stages, it may prove to be a popular option for those seeking new-build properties with a small deposit.

The scheme is likely to be an ideal replacement for the Help to Buy scheme. Applications for Help to Buy properties closed on October 31^st, with all completions due to be finalised by March 2023. Much like Deposit Unlock, Help to Buy allowed first-time buyers to purchase property with just a 5% deposit.

How does the Deposit Unlock scheme work?

The scheme allows first-time buyers and home movers to purchase a new build property with just a 5% deposit.

Lenders are often hesitant to offer high LTV mortgages on new build homes due to risks like devaluation. Because of this and other associated risk factors, lenders will often set minimum deposits for new build properties at around 15 to 25%.

The house builder will insure the mortgages using some of the money from selling the homes. The purpose of this scheme is to make lenders more comfortable about offering high LTV mortgages on new build homes.

With Deposit Unlock, you could:

• Purchase a new build property with a deposit of between 5% and 10%
• Borrow up to £750,000 (depending on the lender and your circumstances)

Am I eligible to use the scheme?

To be eligible for the Deposit Unlock scheme, you must meet the following criteria.

• You must be purchasing a new build property with a participating builder and lender.
• You do not have to be a first-time buyer. If you are an existing homeowner looking to purchase a new build property, you can use the Deposit Unlock scheme.
• You must be purchasing a home that you will be living in, you cannot use Deposit Unlock to invest in a buy-to-let property.
• You cannot own any other property (such as buy to let) at the time of completion.
• You must meet the lender’s criteria for the Deposit Unlock scheme. Lenders have the flexibility to set their own lending restrictions.
• You could borrow up to £750,000 using Deposit Unlock. However, you must meet the lender’s criteria to allow maximum borrowing so that figure is not typical. Most lenders will allow lending of up to 4 to 5 times your annual salary.

How do I apply for a 95% mortgage?

Consult our team of mortgage advisers if you would like to apply for a 95% mortgage. We have access to a wide range of lenders ranging from high street banks to more specialist lenders with the capacity to find mortgage products to suit your individual requirements.

Our mortgage advisers remove the stresses you may feel during the mortgage process. From our initial consultation, we’ll get to know you and develop a good understanding of what your financial goals are. After researching the market and finding a mortgage product best suited to you and your circumstance, we’ll manage the process from start to finish.

Contact us today for your free mortgage consultation.

Your home or property may be repossessed if you do not keep up repayments of your mortgage or any other debt secured against it.