The new build mortgage process can be more difficult than for an older property, particularly if you’re buying off-plan. Our new build mortgage experts will help you find the right deal with the right lender for your needs.
New build mortgage help
There are a few things to understand before we get started.
A new build home is one that has just been built and hasn’t yet been lived in by anyone. Sometimes these properties are sold “off-plan” which means the purchaser commits to buying their new home before construction has started, or if the property is in the process of being built.
If you plan on moving into a new-build home, you might find that few banks are willing to give you a mortgage on a 10% deposit. A Help to Buy loan from the government can provide funding for up to 20% of the purchase price. However, this would mean that the Government owns 20% of the property until you pay off the loan. More information about the Help to Buy scheme can be found here.
We have access to a wide pool of mortgage lenders for new-builds that will offer competitive rates and multiple options you won’t find on the high street.
It’s also worth bearing in mind that when moving into a new-build, you’ll have to pay Stamp Duty – although first-time buyers don’t pay any Stamp Duty on property purchases up to £300,000, or £500,000 for shared ownership properties – as well as legal fees and the cost of valuation, not to mention kitting out your new home with furniture.
If you’re considering buying a new build property, your first step should be to speak to a mortgage broker. We can help you work out how much you can afford to borrow and what it’ll cost. We can also check if you’re eligible for any home-buying schemes, such as Help to Buy.
Usually to secure your new build home, you’ll need to put down a reservation fee deposit. Some developers work to tight timescales, so you may only have 28 days from the point you pay your deposit to exchange contracts, which means you’ll need to apply for your mortgage as quickly as possible.
Arranging a mortgage at short notice can be a challenge for mortgage lenders, which is where our knowledge and relationships with them can help. We have access to new build priority help desks with mortgage lenders which enables us to process your mortgage application quickly and reduce the normal timeframe for getting an offer. We’ll communicate and work closely with all parties, including the developer and solicitors.
Lenders need to know that you are buying a new build because you may need a mortgage that can cope with a long delay between exchange and completion. Otherwise, there’s a risk that your mortgage offer might run out before your home is ready to move in to and then you’d need to apply for a mortgage all over again.
Keep reading to find information on the home buying process and for answers to some of your main FAQ’s.
Or, see our First-time Buyer’s Guide if you need a little more help understanding mortgages and how they work for first-time buyers.
You can also learn about the different types of mortgages and interest rates in our guide.
New Build: Frequently Asked Questions
If you are a first time buyer considering the purchase of a new build property, the Help to Buy scheme could help you not only get a mortgage, but also with a smaller deposit. Just ask us how it applies to you.
In a competitive market, many desirable new builds sell off-plan or at an early stage, long before the building is ready to occupy. A six-month mortgage offer may time-out before you are ready to complete your purchase.
With new build properties, valuations on what the finished property will be worth can vary considerably from the asking price demanded by the developer. Knowing which mortgage provider is likely to value higher can be the difference between securing your desired home and missing out because the mortgage offer falls short.
New build properties often appeal to homebuyers as they typically come with a warranty such as the National House Building Council (NHBC) 10-year certificate which protects you if there are any major defects in the building work.
You may be able to choose your own fittings and finishes such as tiles, carpets, kitchen and bathroom, and new homes can be eligible for Government schemes such as Help to Buy.
They also have the advantage that you won’t be involved in a chain, which can make the whole buying process much easier.
Another benefit is that new homes are typically more energy-efficient than older properties, which could save you money on your gas and electricity bills.
New build properties can be more expensive than older similar properties. This is often referred to as the ‘new build premium’ and means that if you’re considering purchasing a new build, you should aim to stay put for a few years. If you sell very soon after buying, you might find the property has fallen in value.
You may have higher up-front costs than if you were buying an older home, and new build properties often require you to put down a reservation fee to reserve the plot for a specific period.
Another possible drawback is that if you’re buying a new build property off-plan, there is a chance that construction gets delayed. This could mean you aren’t able to move into the property on the date you planned.
Yes. Our consultants are all experienced mortgage advisers and we use our relationships with lenders to convey your personal circumstances to decision makers.
It is difficult for anyone to really know what a new build property is worth because there is no history of buying and selling. Some mortgage lenders may take a more conservative view of the value. You just need to know which one to approach.
It’s up to you how you arrange your mortgage and you shouldn’t feel obliged to use any particular adviser or lender. As an experienced mortgage provider we can help you to assess 1000s of mortgage products to find the most suitable options. The Residential Mortgage Hub has a range of experience arranging mortgages with developers and understands the process and how developers view applications.
Unlike high street lenders we’re active and quick. So, if you need us to talk to an Estate Agent or make things happen fast to secure a particular new build apartment in a sought after development, we’ll do everything we can to make that happen.
Getting a mortgage for a new build property can present many challenges. If you are buying off-plan, you need to a mortgage offer that will still be valid when the property is complete. You may find certain mortgage providers under value new build properties. If you are a first time buyer, the government’s Help to Buy Scheme may give you more options that you thought you had.
As mortgage experts with a team of experienced advisors, we can help you to secure a new build mortgage, quickly and efficiently:
As a first time buyer, we can help you to secure the best available rate on the right Help to Buy mortgage to best suit your circumstances
We can time a mortgage offer to ensure that it is most likely to be valid when your property is ready for occupancy
We know which mortgage providers are most likely to meet the valuation you need for your purchase
If your credit score is not brilliant we can approach lenders who will look beyond the score
What’s more, we’ll liaise with surveyors, solicitors and estate agents on your behalf, and even complete all the paperwork for you, to ensure your home purchase goes smoothly from start to finish.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount will depend upon your circumstances.
The fee is up to 1% but a typical fee is £598.
