The Rezide Equity Loan: A new way to buy with just a 5% deposit

If you’ve been dreaming about buying your first home but feel like saving for a big deposit is impossible, there’s some good news.

Two of the UK’s biggest housebuilders, Barratt Redrow and Persimmon, have launched a brand new scheme called the Rezide Equity Loan. It’s designed to make home ownership more achievable for people who’ve been struggling since the government’s Help to Buy scheme ended.

The good news is, the scheme is also available to existing homeowners.

Let’s break down what it means and how it could help you:

What is the Rezide Equity Loan?

The Rezide Equity Loan is a new way to buy a home with just a 5% deposit.

Here’s how it works:

• You put down 5% of the home’s value as a deposit.
• Rezide gives you an equity loan for 15% of the property’s price.
• You then take out a mortgage for the remaining 80%, through Barclays or TSB.
• The equity loan has a fixed interest rate of 4% and there are no early repayment fees if you want to pay it off sooner.
• You repay the equity loan when you sell your home or finish your mortgage term.

It’s being described as a private replacement for Help to Buy, but without government involvement.

Why this could be great news for you

If you’re struggling to save a big deposit or your mortgage affordability has been tight, this could be a game changer.

Here’s why:

• Smaller deposit: You only need 5%, which can shave years off your saving timeline.
• Lower monthly payments: Because the 15% equity loan replaces part of your mortgage, your repayments may be more affordable than a high loan-to-value mortgage.
• Certainty: The 4% interest rate on the equity loan is fixed, so no nasty surprises if rates rise.
• Flexibility: You can pay off the equity loan early whenever you’re ready with no penalty fees.

As Barratt Redrow’s mortgage expert Adrian MacDiarmid said:

“Since Help to Buy ended many people have felt home ownership is beyond them. This is why we have worked across the industry to design a mortgage for people to buy a new build property with just a 5% deposit – helping make the home ownership dream a reality for them.”

How it compares to Help to Buy

While Help to Buy had some perks, like five years interest free, it also had critics. Some said it pushed up new build prices and didn’t help everyone equally. The new Rezide scheme aims to be simpler, more flexible, and still focused on making homes accessible.

Is the Rezide Equity Loan right for you?

It might be a great option if:

• You’re a first-time buyer struggling to save more than 5%.
• You want a new build home from Barratt Redrow or Persimmon.
• You’d like the security of a fixed rate loan with no surprise fees.

It’s still important to speak with a mortgage adviser who can help you understand whether this fits your financial situation.

The bigger picture

With Help to Buy gone, the housing industry has been searching for new ways to help people buy. The Rezide Equity Loan could fill that gap, offering a fresh, privately funded route to home ownership.

As Persimmon’s sales director Edward McCoy put it:

“Persimmon is always looking for new ways to improve customers’ opportunities to buy a home. We therefore welcome the launch of the new Rezide Equity Loan scheme, as it will add another useful product that enhances affordability.“

So if you thought buying your first home was out of reach, this could be a step towards making it happen. Look out for more information coming soon.