Threshold Mortgage Advice

What is Deposit Unlock and how can I apply?

With cost of living rises stretching people’s finances, many renters are having to sacrifice putting money aside for a house deposit in order to afford basic outgoings such as heating, food and fuel, making the prospect of getting onto the property ladder seem further and further away.

Yet there is a way that prospective British home buyers who’ve managed to accrue even minimal savings could potentially afford to buy a brand new property, and it’s called Deposit Unlock.

What is Deposit Unlock?

A joint venture between the Home Builders Federation and reinsurance firm Gallagher Re, Deposit Unlock offers you the chance to buy a new build home from a participating developer with only a 5% deposit.

Available exclusively on qualifying new build properties in Britain – both flats and houses – deposit unlock allows you to purchase a home of up to £750,000 in value with nothing more than a 5% downpayment and a mortgage from a participating Deposit Unlock lender.

The scheme is open to both first time buyers, and those who have previously owned or currently own a property. All you have to do is find a developer offering Deposit Unlock and a home you can afford to purchase with a 5% deposit and a 95% mortgage.

Who qualifies for Deposit Unlock?

Deposit unlock is available to both first time buyers and buyers who currently own or have previously owned property in Britain. This is one of its main differentiators from the Government backed Help to Buy equity loan scheme, which most recently only first time buyers qualified for.

Homes purchased using Deposit Unlock must be owner-occupied and your sole property. This means that you can only use the scheme to buy a property that you intend to live in yourself and not one that you intend to rent out. It also means that you will have to sell any other property or properties you already own in order to be able to complete on your purchase.

Which developers offer Deposit Unlock?

At the time of writing this article over 70 UK house builders are offering the opportunity to purchase a new build property using the Deposit Unlock scheme, a list of participating builders can be seen on the Home Builders Federation website.

How does Deposit Unlock work in terms of a mortgage?

Just like if you were buying a home on the open market, with Deposit Unlock you will still need a mortgage in addition to your deposit in order to purchase a home.

This means that you will have to pass a series of financial checks with a participating Deposit Unlock lender, to prove that you can afford the monthly remortgage payments on top of any other outgoings you have to meet each month.

You’ll have to provide evidence of your earnings – typically in the form of three months’ payslips from your employer, bank statements that show your average monthly spending, and also evidence of your deposit funds.

If you’ve owned a property before you’ll be familiar with this process. If you’re buying for the first time using the Deposit Unlock scheme, you may wish to read part 1 of our Home buying guide: establishing affordability, which explains affordability checks in more detail.

How do you apply for a Deposit Unlock mortgage?

One of the easiest and quickest ways to find out if you qualify for a Deposit Unlock Mortgage is by speaking to our Threshold mortgage adviser team. We can act on your behalf to approach each participating Deposit Unlock lender, saving you the time and hassle of having to go through the same affordability checks and repeat questions with each lender individually.

Criteria such as self-employment and whether or not you accepted any financial Government support during the coronavirus pandemic can also impact your ability to secure a loan under the Deposit Unlock scheme. That’s why it pays to speak to an adviser first, ahead of viewing any properties, so you know if you qualify for a mortgage under the scheme, and what the maximum property price you can afford to purchase is.

Contact us for a fee-free Deposit Unlock evaluation today

At Threshold we never ask for an upfront payment for our mortgage broker services so putting in a call to our team to check your Deposit Unlock eligibility won’t cost you a thing.

Contact us to find out if you could make your dreams of owning a property come true using Deposit Unlock.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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