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New build deposit unlock scheme

Deposit Unlock explained

Deposit Unlock is a new scheme to help first time buyers and home movers buy a new build home with a 5% deposit. But is it your best option? We look at how it works, who is eligible, how to buy under the scheme, mortgage options and how it compares to your other options, including Help to Buy.

deposit unlock

What is Deposit Unlock?

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).

This scheme was developed by the Home Builders Federation, the body that represents housing developers, along with reinsurance firm Gallagher Re.

While the scheme is still very new, it may prove popular with buyers as a way to purchase a new build home with a small deposit as lenders are often reluctant to offer high loan-to-value mortgages on new build homes.

It is also likely to fill the gap when the Help to Buy Equity Loan scheme, which lets first time buyers purchase a new build home with a 5% deposit, comes to an end in 2023.

How does Deposit Unlock work?

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.

Read more about buying a new build home and new build mortgages.

Which home builders are signed up to Deposit Unlock?

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:

  • Barratt
  • Bellway
  • Bewley
  • Bloor Homes
  • Countryside Properties
  • Crest Nicholson
  • Croudace
  • Davidson Group
  • Fairview
  • Hill
  • Persimmon