Saving for a deposit is one of the biggest challenges for homebuyers. With rising property prices, securing a home often requires a 10-20% deposit, which can take years to save. However, the Deposit Unlock Scheme offers a more accessible route to homeownership by allowing buyers to purchase a new-build home with just a 5% deposit.
Unlike past government-backed initiatives such as Help to Buy, which ended in March 2023, this scheme is an industry-led solution developed by the Home Builders Federation (HBF) in collaboration with lenders and housebuilders. It provides a secure and competitive mortgage option for buyers who might otherwise struggle to meet the higher deposit requirements for new-build properties.
Whether you’re a first-time buyer or an existing homeowner looking to move, the Deposit Unlock mortgage could be the key to securing your dream home sooner than expected.
Related: Homeowner loans explained
What is the Deposit Unlock Scheme?
The Deposit Unlock Scheme is a mortgage initiative allowing buyers to secure a new-build property with just a 5% deposit.
Traditionally, lenders have hesitated to offer 95% mortgages on new-build homes due to the perceived risks associated with newly constructed properties. To address this, housebuilders fund an insurance scheme that reduces lender risk, making high loan-to-value (LTV) mortgages more widely available.
This approach means that lenders can confidently offer 95% mortgages on newly built homes, giving buyers an affordable route to homeownership without requiring government assistance.
Unlike Help to Buy, which is only available to first-time buyers, the Deposit Unlock Scheme is open to first-time buyers and home movers, making it a more flexible option for a wider range of buyers.
How does the Deposit Unlock mortgage work?
The Deposit Unlock Scheme provides a simple and effective way to purchase a new-build home with a low deposit. The process works as follows:
- Buyers save a 5% deposit – Instead of the usual 10-20%, buyers only need 5% of the property’s value as a deposit.
- Lenders offer a 95% mortgage – Participating lenders provide a 95% loan-to-value (LTV) mortgage, covering the remaining cost of the home.
- Housebuilders provide insurance – The housebuilder funds an insurance policy that protects the lender, ensuring they can confidently offer high LTV mortgages.
- Buyers complete the purchase – Once approved, buyers can move forward with purchasing their new-build home.
This scheme is designed to help those who can afford monthly mortgage payments but find it difficult to save a large lump sum for a traditional deposit.
Who is eligible for the Deposit Unlock Scheme?
One of the major advantages of this scheme is its accessibility. Unlike some initiatives only available to first-time buyers, the Deposit Unlock Scheme is open to first-time buyers and existing homeowners.
To qualify for a Deposit Unlock mortgage, buyers must:
- Be purchasing a new-build home from a participating housebuilder
- Have a minimum 5% deposit
- Meet the lender’s affordability and credit checks
Currently, several of the UK’s leading housebuilders are participating in the scheme.
What are the benefits of the Deposit Unlock Scheme?
The Deposit Unlock Scheme offers a range of benefits, making it an attractive option for buyers considering a new-build home.
Lower deposit requirement
Saving for a deposit can be one of the biggest barriers to homeownership. By requiring only a 5% deposit, the scheme makes it easier for buyers to get on the property ladder or move into a new-build home.
Available to more buyers
Unlike some previous schemes that were only open to first-time buyers, Deposit Unlock is also available to home movers, giving existing homeowners a chance to benefit from a low-deposit mortgage.
Competitive mortgage rates
Because housebuilders fund an insurance policy that helps reduce lender risk, participating lenders can offer competitive 95% LTV mortgage rates. While not guaranteed to be lower than all other mortgage options, these rates are designed to be more accessible than standard high LTV products.
No government involvement
Unlike the now-closed Help to Buy scheme, Deposit Unlock is not government-funded, which means fewer restrictions and a more sustainable long-term solution for buyers.
Access to new-build homes
Many major housebuilders participate in the scheme, providing buyers with access to modern, energy-efficient homes that require less maintenance compared to older properties.
How to apply for a Deposit Unlock mortgage
Applying for a Deposit Unlock mortgage is a straightforward process:
- Find a participating housebuilder – Look for a new-build development where homes are available under the Deposit Unlock Scheme. Many leading housebuilders now offer properties through this initiative.
- Check with a participating lender – Not all mortgage lenders offer Deposit Unlock mortgages, so buyers need to find a lender that does. The confirmed lenders at the time of writing include:
- Nationwide Building Society
- Newcastle Building Society
- Accord Mortgages
- Perenna Bank Plc
- Bluestone Mortgages
- Speak to a mortgage advisor – A mortgage broker can help assess affordability and guide buyers through the mortgage application process.
- Save the required 5% deposit – Ensure the deposit is ready before beginning the mortgage application.
- Apply for the mortgage and complete the purchase – Once approved, buyers can proceed with the legal and financial steps to secure their new home.
How does the Deposit Unlock Scheme compare to other buying schemes?
There are several other schemes available to help buyers purchase a home. However, the Deposit Unlock Scheme stands out for its flexibility.
Unlike Help to Buy, which required a government equity loan and was limited to first-time buyers, Deposit Unlock is a market-led initiative available to a broader range of buyers.
Similarly, Shared Ownership allows buyers to purchase a share of a property and pay rent on the remaining portion, but this does not provide full homeownership immediately.
Meanwhile, the First Homes Scheme offers discounted new-build homes for first-time buyers but comes with strict eligibility criteria, including a cap on household income.
In contrast, the Deposit Unlock Scheme provides an accessible and straightforward way to buy a new-build home without government involvement or shared ownership restrictions.
Is the Deposit Unlock Scheme right for you?
For buyers struggling to save for a large deposit, the Deposit Unlock Scheme offers a realistic and affordable route to homeownership.
It provides:
- A lower upfront deposit requirement
- Competitive mortgage rates backed by housebuilders
- Availability for both first-time buyers and existing homeowners
- Access to high-quality new-build homes
If you are considering purchasing a new-build property and would like to explore your options, speaking to a mortgage advisor or an estate agent can help you understand the best path forward.
If you’re ready to find your new home, contact Parkers today to learn more about the latest properties available in your area.
