Nationwide Building Society has become the first major lender to support the 95% loan-to-value lending scheme which is aimed at first-time buyers and second steppers.
Named Deposit Unlock, the scheme is an insurance-backed mortgage which allows buyers with 5% to buy new builds.
It was initially available, following its launch in June, across selected new build plots in the North East of England with the mortgage provided by Newcastle Building Society.
However the news Nationwide, which is one of the biggest lenders in the UK, is supporting the scheme means more people in England, Wales and Scotland can take advantage.
Indeed, Nationwide said Deposit Unlock would be available on more than 1,000 new build sites across these nations. Builders who had signed up to the scheme were already responsible for around 100,000 completions each year, and this was expected to expand over the coming months.
Henry Jordan, director of mortgages at Nationwide Building Society, said: “The need for more new homes has never been more apparent and we are keen to support the Deposit Unlock scheme – giving those with smaller deposits further hope that they can get a home of their own.”
He explained it would provide a long-term alternative to the Help to Buy Equity Loan scheme, which is due to end in around 18 months’ time.
Currently Help to Buy is only available to first-time buyers so the Deposit Unlock provides an opportunity for second steppers with small deposits to access the new build market.
How to access Deposit Unlock
The scheme, which has been developed by global reinsurance broker, Gallagher Re in partnership with the Home Builders Federation (HBF) and leading house builders, is available to potential buyers through mortgage brokers.
It will allow customers to access standard new build loans of between £25,000 and £750,000.
Borrowers using Deposit Unlock will have access to the building society’s range of 95% LTV mortgages, currently starting from 2.89%, which they can use to buy a house or flat.
Energy efficient
Nationwide has set itself an ambitious target that half the properties on its mortgage book will have Energy Performance Certificate (EPC) ratings of C or above by 2030.
This means customers buying the most energy efficient properties will be rewarded with cashback under Nationwide’s Green Reward scheme too
Henry added: “During the pandemic we spent much more time in our homes and for many of us it highlighted the need for a more suitable property.
“Many people are looking for a home that is energy efficient as climate change becomes a priority and energy bills continue to rise. Our homes are where we have one of the biggest individual impacts on climate change and we remain committed to helping make the homes we lend on greener and more sustainable.”
Affordability crisis
Meanwhile, Neil Jefferson, managing director at the Home Builders Federation, said: “We’re delighted to be working with Nationwide to make Deposit Unlock available to homebuyers all over the country.
“Home builders have stepped up and developed a privately-funded product in Deposit Unlock which will provide buyers with a route to home ownership, including for first-time buyers without vast deposits.
“Nationwide’s involvement demonstrates a very welcome commitment not only to their customers but also to the new homes market, helping us to tackle our long-term housing affordability crisis.”
You can find out more about the Deposit Unlock scheme by clicking here. You will need to apply via a mortgage broker.
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