What Are New Build Mortgages?
New build mortgages are loans designed for purchasing newly constructed properties or homes bought off-plan. Lenders often have specific lending criteria for new builds due to their unique characteristics, such as pricing and construction timelines.
Key Features of New Build Mortgages
- Deposit Requirements
New build mortgages often require higher deposits, typically 15%–20% of the purchase price. This is due to the perceived risk of fluctuating values with new properties.
- Mortgage Offer Validity
Offers for new build mortgages may only last 6–12 months. If construction delays occur, you might need to extend the offer or reapply.
- Loan-to-Value (LTV)
Lenders may offer lower LTV ratios for new builds compared to older properties. A 75%-85% LTV is common, meaning you’ll need a larger deposit.
- Builder Incentives
Developers may offer incentives like covering legal fees, stamp duty, or adding furnishings. While beneficial, ensure these offers don’t inflate the purchase price.
The Process of Buying a New Build
- Reserve Your Property
Pay a reservation fee to secure your new home. This fee is typically deducted from the purchase price upon completion.
- Apply for a New Build Mortgage
Work with a lender experienced in new build properties. They’ll consider your financial profile and the property’s eligibility under their lending criteria.
- Exchange Contracts
Once your mortgage is approved, exchange contracts with the developer. At this stage, you’ll typically pay a 10% deposit.
- Completion
When the property is ready, complete the purchase. Your mortgage funds are released, and you can move into your new home.
Why Choose a New Build Home?
When choosing a residential mortgage, understanding the options available is crucial. Here are the main types:
Energy Efficiency
New builds are designed with modern energy-efficient standards, reducing utility bills and environmental impact
Customisation Options
Many developers let you personalise aspects of your new home, such as choosing fixtures, finishes, and layouts.
Build Warranties
Properties often come with warranties from the National House Building Council (NHBC) or similar organisations, covering structural issues for up to 10 years.
Government Support
Schemes like Shared Ownership and Help to Buy make new build homes accessible for first-time buyers.
Considerations When Buying a New Build
Premium Pricing
New builds may come with a premium price compared to older properties. Be aware of potential value drops in the short term.
Snagging Issues
Always inspect your new build for minor defects and address these with the developer before moving in.
Legal Fees and Extras
Factor in costs like legal fees, stamp duty, and additional furnishings when budgeting for your new build.
Tips for Securing a New Build Mortgage
- Save a Larger Deposit
A bigger deposit improves your chances of approval and may lower your interest rate.
- Work with a Mortgage Broker
A broker specialising in new build mortgages can connect you with lenders offering competitive rates and terms.
- Check the Build Warranty
Ensure the property has a valid NHBC or similar warranty to meet lender requirements.
- Plan for Delays
Construction delays are common. Secure a mortgage offer with flexibility for extensions.
Benefits of New Build Mortgages
- Tailored Products: Lenders understand the unique needs of new build buyers and offer specialised mortgages.
- Modern Living: Enjoy the benefits of a newly constructed home, from energy efficiency to contemporary designs.
- Low Maintenance: New builds require less immediate maintenance compared to older properties.
FAQs About New Build Mortgages
Can first-time buyers apply for new build mortgages?
Yes, many first-time buyers use new build mortgages, often with the help of government schemes like Shared Ownership.
Do new build properties cost more?
New builds can be priced higher than older properties, but they often include warranties and energy-efficient features.
What deposit do I need?
Most new build mortgages require a deposit of 15%–20%, but some schemes allow for as low as 5%.
What happens if construction is delayed?
If your mortgage offer expires, you may need to reapply or request an extension from your lender.
Do new build homes have warranties?
Yes, most come with a 10-year warranty from NHBC or a similar provider, covering structural defects.
Why Choose The Landlords Broker?
At The Landlords Broker, we specialise in helping buyers navigate the unique challenges of securing new build mortgages. Here’s how we can help:
Tailored Advice
Find the right mortgage for your new build home.
Expert Support
Guidance through the entire process, from application to completion.
Wide Network
Access lenders offering competitive rates and terms for new build properties.
Transparent Costs
Clear explanations of fees and terms, ensuring no surprises.
Start Your New Build Journey Today
Ready to explore your options? Contact The Landlords Broker today for expert advice and personalised solutions for new build mortgages. Let us help you turn your dream of a new home into reality.