Deposit Unlock – Ladybird Living – Your London Estate Agent

Feb 16 2023

Deposit Unlock: How does it work and what are the benefits and drawbacks?

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: