A new initiative aimed at supporting mortgage applicants with small deposits is set to become more widely available across England, Wales and Scotland.
Named Deposit Unlock, the initiative is an insurance-backed move to allow lenders to offer 95% loan-to-value mortgages to applicants. This is beneficial to people who are keen to buy their own property but are struggling to stump up the kind of money required for a larger deposit.
The initiative is backed by Gallagher Re, a global reinsurance firm, and the Home Builders Federation. The aim is to provide those would-be buyers keen to take advantage of 95% LTV mortgages with the chance to secure a new-build property.
Deposit Unlock is similar in scope to the 95% LTV mortgage plans Rishi Sunak announced as part of the 2021 budget announcement in March 2021. However, there are some important differences.
How has Deposit Unlock gone so far?
Deposit Unlock has been limited in its reach to date following its June 2021 launch. It was initially only offered by the Newcastle Building Society, and was only applicable for certain newbuild plots in the North East of England.
This is set to change quite dramatically with the news that one of the UK’s leading lenders is to start offering mortgages backed by the Deposit Unlock initiative.
Which lender is this?
Nationwide has committed to supporting the scheme. This major lender has said that Deposit Unlock will be applicable and available for properties at more than 1,000 new build sites across England, Wales and Scotland.
Might this be a good fit for me?
This may well pique the interest of any contractors or freelancers keen to get onto the property ladder with a minimal deposit. 95% LTV mortgages as a concept have garnered more focus and attention in recent times as the mortgage market looks to bounce back from a tricky period.
One of the most interesting elements of this initiative is that it differs from many similar schemes of this type.
Many initiatives of this nature are only aimed at first-time buyers, with an example being the government’s help-to-buy scheme.
Where Deposit Unlock differs is that people already on the property ladder can also take advantage of it. So if you have a home but are looking to move into a newbuild and climb the ladder that way, then this could be a good option.
Whether more lenders look to get involved with the initiative remains to be seen. But if you are in a position where a small deposit suits you or is all you can afford, this presents another option that may be worth pursuing.