There are so many schemes bouncing around at the moment, it can be so hard to keep up. Help to Buy, the Mortgage Guarantee scheme, Lifetime ISAs…. it can all feel a little overwhelming. Earlier this month, a new scheme has been rolled out nationwide to help first time buyers: the Deposit Unlock. It sounds intriguing and actually, it is another great resource for those at the beginning of their property buying journey.
Let’s take a look at what this is, how it can help you and how to access it:
What is the Deposit Unlock Scheme?
As property prices increase, the challenge to get on that first rung of the property ladder can feel like an impossible task. We have currently have a great Government scheme, Help to Buy, which assist homebuyers with overcoming this problem. However, this is set to close in March 2023. The Help to Buy scheme was first created in 2013 and later evolved in 2021. The most recent scheme offered homebuyers an equity loan to purchase a property, with a 5% deposit.
The Deposit Unlock Scheme has been set up as a long-term solution to combat the struggles of first and second time buyers. It is similar to the Help to Buy scheme, except it has not been introduced by the government, but by certain banks. This means that the total balance is borrowed from the bank and not the government. There is, however, one notable drawback of this new scheme. Interest is immediately added from the first repayment, whereas the Help to Buy initiative is interest- free for 5 years.
This scheme was originally piloted in June this year with the Newcastle Building Society and has recently been expanded. Deposit Unlock is a joint venture between The Home Builders Federation, which represent a large proportion of homebuilders, and the insurance company, Gallacher Re.
Additionally, the Deposit Unlock scheme:
- Only allows you to purchase new build homes up to £750,000, depending on your region.
- Is open for ‘second steppers’, as well as first-time buyers
- Is currently only available with a small selection of homebuyers and lenders. There are high hopes that this will increase rapidly over time.
Who is currently offering Deposit Unlock?
Following the successful pilot in the North East with the Newcastle Building Society, Nationwide has now become the first major mortgage lender to offer the scheme with rates starting from 2.89%.
How to access it?
Currently, in its early days, the most up to date information, including participating builders can be found on the Home Builders Federation website. As Nationwide is the only major bank to offer this scheme, a chat with an advisor would be your first point of contact.
If this new scheme takes off, then homebuyers at the bottom of the ladder will be able to access a greater range of properties. I will be watching this one closely as it really could be a great scheme for first-time buyers.