Deposit Unlock Scheme rolls out nationally

Back in June we reported on the trial of a new housebuilding industry-led mortgage scheme, Deposit Unlock, in the North East of England. Today, the scheme rolls out nationally with 17 major housebuilders taking part. But what is the scheme and who can quality for it? Find out more about Deposit Unlock.

What is Deposit Unlock?
It is a mortgage indemnity scheme being rolled out by the Home Builder Federation (HBF) and its members. Lenders will offer 95% mortgages to new-build home buyers, many of whom struggle to save for large, hefty deposits. After an initial trial in the North East of England, with the first completions under the scheme going through in the last week, it’s being rolled out across the whole of the country. And with that news, also comes confirmation that alongside Newcastle Building Society offering 95% LTV mortgages as they did through the pilot, Nationwide Building Society is another major lender coming on board to offer products. More lenders are expected to be joining the scheme in the New Year, as well as housebuilders.

Why is Deposit Unlock needed?
Despite initiatives in place to help people get onto the property ladder, deposits are still too steep and unobtainable for many. Help to Buy was one such scheme which made a big difference in helping fist-time buyers. However, the changes to the new Help to Buy scheme and the introduction of the regional price caps have rendered the scheme less accessible to many. The phenomenal rate of house price growth across the country in the last year hasn’t helped this.
There are also concerns over the new Help to Buy scheme finishing in 2023. A replacement solution was required, and one that is sustainable, to help more buyers get onto the housing ladder. Continual demand for new-build homes is necessary to ensure new homes can be built, something which Deposit Unlock achieves.

How does Deposit Unlock work?
Deposit Unlock is a mortgage indemnity scheme, with the mortgages currently available from two leading UK high street lenders. Those looking to buy a new-build home will be able to get a 95% LTV mortgage, reducing the amount required for a deposit. Once the home purchase goes through, the housing developer will fund a mortgage indemnity, depositing cash to cover any potential losses. Ultimately, the scheme, which is brought together by the Home Builders Federation, 17 of its largest developer members, as well as Homes for Scotland (HFS) and the Deposit Unlock Scheme Manager Gallagher Re offers additional security for the lender, reducing the risk.

Who qualifies for Deposit Unlock?
In the first instance, anyone who is looking to buy a new-build home, who does not have access to a substantial sum for a deposit would qualify. The 95% new-build loans are available on new-build properties for both first-time buyers and those stepping up to buy their second property, up to the value of £750,000. The loans are available on new home developments across England, Scotland, and Wales, and is open to all members of both HBF and HFS.
To give an idea of the new homes available, here is the current list of housebuilders involved in the scheme: Barratt, Bellway, Bewley, Bloot, Countryside, Croudace, Davidsons, Fairview, Hill, Keepmoat, Miller, Persimmon, Redrow, Taylor Wimpey, Thakeham, and Vistry. As are new lenders expected to join the scheme, it is anticipated that more developers will be joining Deposit Unlock in the new year. It’s all encouraging news for the new-build property market, helping keep the flow of new homes accessible, and allowing more new homes to be built.

If you are keen to buy a new build-home using the Deposit Unlock scheme, you can start your search for your dream new home with us here. Simply type in the location where you would like to buy, and we will bring you a list of the latest new homes on new developments with the leading developers large and small. Start your search here.