This blog will discuss the new scheme ‘Deposit Unlock,’ how it works, the benefits and drawbacks of the scheme.
What is Deposit Unlock?
Deposit Unlock is a new scheme which aims to support first time homebuyers. This scheme allows first time buyers to purchase a new build home with just a 5% deposit.
You can only buy a house from a house builder participating in the scheme.
How does Deposit Unlock work?
Mortgage lenders are often reluctant to lend a large amount of money for the purchase of new builds. This is due to the risks in relation to the devaluation of the property and other risks involved. As a result of this, mortgage lenders will often set a minimum deposit of 15% – 25% for new builds.
Deposit Unlock has helped change this by allowing first time homebuyers to purchase a new build with a 5% deposit. The house builders would pay to insure the mortgages instead.
Currently, the maximum loan you can take out to buy a property through this scheme is currently £750,000.
What are the benefits and drawbacks of Deposit Unlock?
The main benefit of Deposit Unlock is that it offers first time buyers and home movers access to 95% mortgages on new builds. The scheme also allows customers to access a low deposit mortgage at competitive interest rates.
A drawback is that you can only purchase a home from a participating builder meaning that you have a limited choice of properties. Additionally, only a few mortgage lenders are currently signed up to the scheme including Accord Mortgages, Nationwide Building Society and Newcastle Building Society.
The participating home builders are:
T +44 (0)203 488 1488