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The NewBuy scheme - what it is

The NewBuy scheme helps people get a mortgage if they have only a 5 per cent deposit. The scheme applies to new builds (flats and houses) and is available from participating builders in England only.

How does the NewBuy scheme work?

If you would like to buy a new build property and you have at least five per cent deposit of the purchase price saved as a deposit, you can ask a participating developer, mortgage lender or Independent Financial Advisor (IFA) to discuss your eligibility for the NewBuy scheme.

Your mortgage application for the NewBuy scheme will be assessed in the same way as any normal mortgage application.

If you meet the lender's affordability and credit criteria, and you qualify under the guidelines, you could be eligible for a loan of up to 95 per cent of the purchase price.

To find out more about the scheme and search for developers in your area, go to the NewBuy scheme website.

• NewBuy scheme website - what to do next Opens new window

How do I qualify?

To qualify for NewBuy, you must be a UK citizen or have the right to remain indefinitely in the country.

NewBuy properties must be:

• new build - residential properties being sold for the first time or for the first time in the current form
• priced up to £500,000 - but there will be no cap on income
• full ownership – NewBuy is not available for shared ownership or shared equity purchases
• primary homes – NewBuy will not be available for the purchase of second homes or for buy-to-let purchases

You cannot use NewBuy together with any other publicly funded mortgage scheme.

NewBuy does not apply to interest-only mortgages.

How does a mortgage indemnity work under the NewBuy scheme?

A mortgage indemnity protects your mortgage lender, if you fall behind with your mortgage payments, and the lender has to repossess the property and sell it.

This can result in a loss to the lender if the property has to be sold for a value lower than the remaining value of the mortgage.

Under the NewBuy scheme, the home builder puts aside a certain amount of the sale price into a special indemnity fund that’s guaranteed by government.

If your property is repossessed and sold for less than the amount of the outstanding mortgage debt, the lender can claim on the mortgage indemnity to recover some of its loss.

Having an indemnity does not give you additional protection from repossession. Also, it does not protect you from negative equity or a shortfall between the sale price and the outstanding debt.

In the event of your home being repossessed, you will still be responsible for repaying any shortfall between the sale price of the property and the outstanding mortgage debt.

More useful links

• Buying a home - a step-by-step guide

• Affordable home ownership schemes for newly built homes

• What you can do to avoid repossession - a guide