What is Deposit Unlock?

Full Definition

Deposit Unlock is a mortgage indemnity scheme created by the housebuilding industry to help buyers purchase a new-build property with only a 5% deposit. Participating developers fund an insurance policy that protects the lender against losses if the borrower defaults, which lets the bank offer a 95% loan-to-value mortgage on a new home where it might otherwise be cautious. The buyer applies for an ordinary residential mortgage from a participating lender, repaying capital and interest in the usual way; there is no government loan or second charge, unlike some past Help to Buy products. It is open to both first-time buyers and home movers, subject to standard affordability and credit checks and a price cap set by the lender. It matters because it widens access to new-build homes for those with smaller deposits, though a higher loan-to-value typically means a higher interest rate and larger monthly payments.

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