Allison Homes joins the Deposit Unlock scheme – is it the new Help to Buy?

We are excited to announce that we have signed up for the new Deposit Unlock scheme, which aims to help property seekers secure their perfect home by reducing the burden of the initial deposit. The appeal of the scheme is similar to that of the popular Government-backed Help to Buy scheme, which ended in March 2023. But how similar are they?

Who is eligible for the scheme?

The first major difference is who the scheme is available to. Help to Buy was exclusively available to first time buyers, whereas Deposit Unlock was launched by The Home Builders Federation (HBF) in partnership with lenders and housebuilders, and is available to both first time buyers and existing homeowners. This means that buyers can use the scheme to upsize out of a home that they have grown out of if desired.

How much can buyers borrow?

In both schemes, the buyer is/was able to purchase a home with just a five per cent deposit*, which is a great help for buyers who are in a good financial position to make mortgage payments on a home but are having trouble saving up for the large deposit payment.

Help to Buy was an equity loan from the Government that meant first time buyers could pay a five per cent deposit and then borrow 20 per cent (40 per cent in London) interest free for five years, and the rest could be borrowed from a standard mortgage lender.

For Deposit Unlock, buyers pay the five per cent deposit and are then able to secure a 95 per cent mortgage, which is made possible because members of the HBF joined forces to create a nationwide insurance scheme that offers protection on participating mortgages.

With Deposit Unlock, the buyers are able to get the mortgage on homes up to the value of £833,250*, whereas with Help to Buy there were regional price caps which tended to be lower. For example, the cap in London was £600,000 and in the North East it was £186,100.

This means that buyers who use Deposit Unlock can borrow more and use it on higher value properties, without the regional restrictions that came with Help to Buy.

What are the restrictions?

Both schemes are/were only available to use on new build homes, and only those from builders who have registered with the scheme. As Help to Buy was a Government-backed loan, buyers did not have to think about which lenders would offer the loan, whereas Deposit Unlock is only available through participating lenders.

Jason Blunden, Managing Director at Evolve Financial Solutions, said: “This scheme is a great new opportunity for customers to buy a new build property with a five per cent deposit. The scheme is supported by some great lenders, including Nationwide, Accord and Newcastle. 

“The lenders’ standard affordability is used, so homebuyers are not adversely affected by restricted lending limits just because they are looking at buying at 95 per cent. There is a competitive range of two and five years fixed mortgage products available, and these can be used up to a maximum loan of £750,000 with Nationwide. The scheme is also available to any buyers, not just first time buyers, so home movers can use this as well.”

Find out more about the Deposit Unlock scheme.

*T&Cs apply.