When Shy Salvador, 42, moved from Singapore to London, she was shocked to find she was paying £1,000 more for a rental property half the size in the capital.
Originally from the Philippines, Shy lived and worked in Singapore for 12 years as a product specialist before relocating to the UK in 2024 with her husband.
She describes being shocked at how expensive the London rental market was compared to what she was paying for back in Singapore.
“When I moved to London, I thought I would be paying the same [or similar] as Singapore but I soon realised the prices are really high,” she said.
Shy found a studio apartment in North London, which she said was very small and had a pull-down bed that she needed to put away every day to work from home, paying £1,500 a month for the property.
She said her apartment in Singapore cost her £1,000 less than what she was paying for in London, and it was also bigger.
Shy and her husband had saved some money when living in Singapore and felt they had enough for a deposit and wanted to buy their first home but soon realised house prices in London were also unaffordable.
“I started to look for properties in London, but they were quite expensive, and I realised my savings wouldn’t cover the cost of the deposit and everything. And also, because I had been living in the UK for less than a year, I couldn’t get a big mortgage. So, I started to look outside of London,” she explained.
That is when Shy came across boosted deposit schemes, when she came to view a property with developers Barratts.
These schemes, which are not loans, help homebuyers secure a mortgage with a smaller down payment.
A developer contributes an additional percentage of the purchase price to the deposit, meaning the buyer can reduce their mortgage loan amount.
The maximum contribution from a developer to a boost deposit scheme is typically 5 per cent of the sale price of the property.
Many developers offer this type of deal to encourage first-time buyers to purchase new builds. At a time when affordability is an issue, making an offer means they can keep sales momentum up – and crucially, the price of the property intact – whilst still maintaining a profit.
In many cases, the incentive does not have to be paid back but there are variations where support comes as an equity loan-style arrangement or it may be offered as cashback on completion.
Lorna Hopes, a mortgage specialist at advice firm Smith & Pinching, said: “These schemes are first and foremost about boosting the developer’s sales.
“Whether that be through opening up the development to a wider pool of purchasers, who might otherwise struggle to meet the mortgage affordability requirements, or as a way to shift unsold stock.”
Shy contributed 10 per cent of the deposit on a two-bed apartment in Harlington, Hayes, costing £430,000, with Barratts boosting it by 5 per cent, to meet the lender’s criteria of needing a 15 per cent deposit to secure the loan.
She said: “[The boosted scheme] was a big help, we may have been able to get the 15 per cent together but we would have no money left over.
“That wouldn’t have worked for us because my husband hadn’t found a job yet since moving from Singapore, so we would have got the house but would have had no means to live.”
Downsides of boosted deposit schemes
Although these deposit boost schemes can be an effective way of getting onto the property ladder, some lenders will not accept them, as they can be deemed to be effective discounts of the house price rather than part of the deposit.
A boosted deposit also does not change how lenders assess affordability and buyers still need to show they can manage repayments over the long term, so the scheme may not help those whose main barrier is income rather than saving for a deposit.
Holly Tomlinson, a financial planner from Quilter, urged buyers to be careful not to focus solely on the size of the deposit being offered.
“These schemes are often built into the overall deal, whether through the headline price of the property, the choice of mortgage lender available, or other incentives being withdrawn. It is important to look at the full cost of the purchase and not just the upfront support,” Tomlinson said.
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There can also be practical limitations to these schemes, with some lenders not accepting these deposits at all, while others apply stricter criteria, which can reduce the range of mortgages available.
“That can mean higher rates or less flexibility when it comes to remortgaging in the future,” Tomlinson added.
However, for someone who is planning to stay put for several years and has a comfortable buffer in their monthly budget, these schemes can make sense.
Buyers also need to be aware of the financial risks if house prices fall, said Louise Ainley, a conveyancing solicitor at Access Law Online.
She said: “With only a small amount of equity at the outset, buyers are more exposed to price falls.
“On a £150,000 purchase with a 95 per cent mortgage, the loan would be £142,500 and an 8 per cent drop in the property’s value would leave the home worth less than the outstanding mortgage [something known as negative equity].”
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