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What is Deposit Unlock?
Deposit Unlock is a scheme that allows you to buy a new build home with just a 5% deposit.
It’s a low-deposit mortgage solution designed to help people onto the property ladder.
Can I buy a new build home with a 5% deposit without the scheme?
Some mortgage lenders do now offer 95% lending on new build houses without needing to use Deposit Unlock. Regular options are typically much more restricted on new build flats.
Who is eligible for Deposit Unlock?
You must be:
- 18 or older
- a first time buyer or home mover
- able to get a 95% mortgage from one of the lenders partaking in the scheme
- buying a specially selected plot from one of the builders on the scheme (not every plot on every development will be available to buy via Deposit Unlock)
- borrowing less than £750,000
You can’t use this scheme if you will own another property on completion, i.e. a buy to let.
Can I use another scheme alongside Deposit Unlock?
No. Deposit schemes such as Forces Help to Buy and Lifetime ISAs can be used, but you can’t use a purchasing scheme like Shared Ownership as well as Deposit Unlock.
Can the 5% deposit come from the builder?
No. Mortgage lenders want to see that you’ve got your own deposit.
How does buying using the scheme work?
You need to look specifically for a Deposit Unlock property with a participating builder. You can find a list of those builders on the Home Builders Federation website.
Once you have found one you want to buy and have had an offer accepted, the developer will issue you with a loan confirmation letter that you need to pass on to your mortgage broker and lender. This letter confirms the property is on the Deposit Unlock scheme.
You can then apply for a mortgage with one of the lenders who will accept the scheme. Each lender has their own criteria in relation to things like maximum price and self-employed income, so be sure to check your eligibility before paying to reserve a plot, especially as the number of lenders is limited. The rest of the process will be the same as buying any property.
How much can I borrow?
That’s up to mortgage lenders.
Lenders undertake a thorough assessment of your income and expenditure in order to reach a figure. They factor in things like student loans, childcare, and maintenance payments as well as credit cards and personal loans.
Every lender has a different calculator that they use, as well as different criteria that determines whether or not you are eligible. If your case doesn’t fit with one lender, it might fit with another.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Chat with our expert advisor
Your home in the future
The Deposit Unlock scheme only applies on the very first purchase. The house or flat then ‘falls out’ of the scheme on future sales, so you are free to sell it on the open market.
Likewise, when you come to remortgage, it will be classed as a ‘normal’ remortgage. You would not need to mention the Deposit Unlock scheme to a new lender.
Can I use Deposit Unlock for a buy to let purchase?
No, Deposit Unlock is only for residential purchases. What’s more, buy to let mortgages typically require a 25% deposit.
Pros and cons of the Deposit Unlock scheme
Advantages
- You can buy a new build property with a small deposit
- No additional repayments, unlike the old Help to Buy equity loan
- No restrictions on future resale
- Open to home movers as well as first time buyers
Disadvantages
- Limited to new build properties, which are often sold at a premium and are subject to high competition
- Limited availability of plots on the scheme
- Low number of banks currently willing to lend on this scheme
- Risk of negative equity
How can The Mortgage Store Chorley help with Deposit Unlock?
Ready to buy your first home? The Mortgage Store Chorley is here to help!
With our expertise in Deposit Unlock, we make your dream of homeownership a reality. Let us guide you through the process and find the perfect deal tailored to your needs. Say goodbye to uncertainty and hello to your new home with us by your side.
Contact us today and take the first step towards owning your own place!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE