The deal, which is due to be released in a few weeks’ time, will provide an alternative to the government’s Mortgage Guarantee Scheme and the Help to Buy initiatives.
Indeed, both schemes offer limitations to buyers with small deposits. While the Help to Buy scheme is available for people who want to purchase new build properties, it is limited to first-time buyers.
Meanwhile the government’s Mortgage Guarantee Scheme, whilst open to first-timers and movers, does not currently include deals for borrowers who want to purchase new build properties.
The ‘Deposit Unlock’ 95% loan-to-value (LTV) products, which work as an indemnity scheme, plug both these gaps. They have been developed by Newcastle Building Society along with the Home Builders Federation and its members and insurance brokers Gallagher Re with the aim of addressing the need for more homes.
But the scheme has also been designed to help more low-deposit borrowers secure a new-build home up to a value of £330,000 with a deposit of just 5%.
Newcastle is offering the products initially to borrowers in the North East of England.
Stuart Miller, customer director at Newcastle Building Society, said: “Key to our purpose as a regional Building Society is to help more people get on and up the property ladder – especially those without access to the bank of mum and dad.
“Being the first lender to adopt the scheme means we’ll be providing new-build buyers with more options to access low-deposit mortgage products, and helping to address the pressing need for more homes to be built.”
Greg Cunnington, director of lender relationships and new homes at Alexander Hall, welcomed Newcastle’s new offering.
He said: “The Help to Buy scheme has catered for borrowers with a 5% deposit on new builds in recent years – and has been remarkably successful.
“With the scheme having changed this year with the introduction of regional price caps and to cater for first-time buyers only, and with an end date in place of 2023, the more support for buyers in this area the better to ensure they will be catered for from this time.
“As such, Newcastle should definitely be applauded for trying something innovate and an interesting proposition.”
