Freedom to Buy vs Deposit Unlock: Which Scheme Works for New Builds?

Buying a UK property with a 5% deposit is possible, but which scheme applies depends entirely on what you are buying. This is one of the questions Turkish and international investors ask the Optivest team most often, and the answer is not straightforward: Freedom to Buy, made permanent in July 2025, and Deposit Unlock, which closed to new applications on 30 April 2026, look similar on the surface because both involve a 5% deposit. Structurally, they are completely different products. Getting that distinction wrong can produce a costly surprise at the reservation stage.

What Freedom to Buy Is and How It Works

Freedom to Buy is the UK government's permanent 95% LTV mortgage guarantee scheme, launched as a rebrand of the previous Mortgage Guarantee Scheme that ran from 2021 until June 2025. From July 2025 onwards it became permanently accessible rather than time-limited, with HM Treasury providing a government-backed guarantee to participating lenders to keep 91-95% LTV mortgages in the market on an ongoing basis.

The practical mechanics are simpler than the name suggests. There is no separate Freedom to Buy application form to complete. You apply for a standard 95% LTV mortgage through a participating lender and the guarantee operates behind the scenes automatically. Participating banks currently include Lloyds, Halifax, NatWest, HSBC, Barclays and Santander.

The core eligibility conditions are:

Does Freedom to Buy Cover New Builds?

The short answer is: rarely in practice, even though the scheme rules do not explicitly bar new builds across the board. In practice, most participating lenders decline new build applications under this product. Shared ownership properties are also excluded, and the same conservative approach typically extends to new build flats in particular, where lenders apply their own internal policies on top of the scheme's minimum requirements.

The reason comes down to how lenders price risk. New build properties carry a well-understood "new build discount" risk, the tendency for values to dip in the early years after completion. A lender extending 95% LTV financing is already operating at the thinner end of its risk tolerance. Stacking new build depreciation risk on top of a high LTV is two layers of exposure most lenders choose not to accept, regardless of what the scheme rules technically permit.

The practical result: a buyer who assumes Freedom to Buy will cover their off-plan purchase because the property value is under £600,000 may arrive at the mortgage stage to find the product is simply not available for that transaction.

The Scheme Built Specifically for New Builds: Deposit Unlock

The 5% deposit route that was actually designed for new builds was Deposit Unlock. There is an important update to register here: Deposit Unlock closed to new applications on 30 April 2026. Buyers who already held a mortgage offer on that date continue to be honoured by their lender, but new Deposit Unlock applications are no longer possible.

Understanding how the scheme worked remains useful, both for context and for evaluating the alternatives that have emerged since.

Freedom to Buy and Deposit Unlock Side by Side

The two schemes sound similar because the headline deposit figure is identical. The underlying mechanics are not:

Is a 5% Deposit Still Possible for New Builds After Deposit Unlock Closed?

Yes, but the single dedicated window has gone, and accessing what remains almost always requires working through a broker. The current options for new build buyers include:

It is worth noting that lenders applying their own new build criteria to standard 95% LTV products will usually impose additional conditions around incentives from the developer, the type of property (houses typically treated more favourably than flats), and overall loan size.

The Core Mistake International Buyers Make: Same Number, Different Product

Turkish and international investors consistently make one particular assumption: because both schemes involve "5% deposit", they treat them as interchangeable. The structural difference is fundamental. Freedom to Buy is a government guarantee that makes 95% LTV mortgages available on the existing (secondary) market. Deposit Unlock was a separately financed, industry-run mechanism designed exclusively for new builds, and it has now closed.

What this means in practice: a buyer who reserves off-plan based on a sales office figure of "you can buy with 5%", then discovers at the mortgage stage that Freedom to Buy does not apply to new builds, faces having to reassess the whole financing structure. Standard lenders typically require 15-25% deposits for new build properties. That is a very different conversation to have after a reservation fee has been paid.

Mortgage planning for an off-plan purchase needs to start before reservation, not after.

Optivest Note: Two patterns come up repeatedly when investors approach us after running into problems at the mortgage stage. First, taking the sales office's "5% available" statement at face value without asking which specific product or scheme it refers to and whether that product is actually accessible via a lender for that particular development. Second, treating the mortgage conversation as something to sort out post-reservation. For off-plan transactions, the gap between a mortgage offer and build completion is typically 18-24 months or longer. Lender policies, scheme availability and the interest rate environment can all shift in that window. Clarifying scheme eligibility with a broker before you reserve is not over-cautious; it is the difference between having options and not having them.

Scope and Disclaimer

Optivest is a property investment consultancy and FCA-authorised mortgage broker. We do not provide tax, legal or immigration advice. This article is for general information purposes only and does not constitute investment, legal or tax advice. Mortgage eligibility depends on individual financial circumstances, credit history and the specific property being purchased. Scheme conditions and lender policies change over time, and the information in this article is based on publicly available sources that may have been updated since the time of writing. Before making any financial decision, consult an FCA-authorised mortgage broker, an SRA-regulated solicitor and an independent tax adviser.

Frequently Asked Questions

Do I need to be a UK citizen to access Freedom to Buy?

Freedom to Buy is assessed on UK residency status and lender eligibility criteria, not citizenship. The scheme is open to both first-time buyers and home movers, provided the property is a primary residence valued at no more than £600,000. That said, international buyers with limited UK credit history or who are not UK-resident will find lender eligibility assessed within a much narrower framework. This is a conversation to have with a mortgage broker in detail before proceeding.

Now that Deposit Unlock has closed, have I lost my chance of a 5% deposit on an off-plan property?

No. Deposit Unlock closed but the possibility of a 5% deposit on a new build has not disappeared entirely. Own New Deposit Drop is the most direct current alternative, though availability depends on developer and lender participation. Some lenders also offer 95% LTV products for new builds under their own criteria, typically accessible only through a broker. The landscape is more fragmented than it was when Deposit Unlock provided a single, clearly defined route.

Does the government guarantee under Freedom to Buy reduce my mortgage interest rate?

No, not directly. The guarantee redistributes risk between the lender and the government, but it does not translate into a lower rate for the borrower. Your interest rate is still determined by market conditions, your individual credit profile and the specific product you choose.

Can I use Freedom to Buy for a buy-to-let investment property?

No. Freedom to Buy is restricted to primary residence purchases. Buy-to-let and second home purchases are excluded. Standard buy-to-let mortgages operate under different criteria, typically requiring deposits of 25% or more, with separate affordability assessments.

What if the property I want costs more than £600,000?

Properties above £600,000 fall outside Freedom to Buy's scope entirely. This threshold is relevant to a significant proportion of new build stock in London and other high-value areas, where central locations can push values past that ceiling quickly. Above that price point, buyers need to consider non-scheme routes, which at higher loan sizes can include larger deposit requirements, private banking structures or other forms of financing.

When should I get a mortgage offer for an off-plan purchase?

The latest sensible point is at the reservation stage, and earlier is better. Standard mortgage offers run for around six months, while most developers project 18-24 month build programmes. That gap makes mortgage planning a timing-critical exercise rather than an administrative afterthought. Scheme availability and the interest rate environment can both shift during the build period, which is why having a broker map out contingency scenarios early is a practical step, not an optional one.

The complexity of these schemes, combined with the timing pressures of off-plan transactions, makes working with the right professional genuinely important. If you want to understand how Freedom to Buy and the current new build alternatives apply to your specific situation, the Optivest team is a good place to start that conversation.