New build mortgage
There has been a significant rise in the amount of new build properties available in recent years in the UK. 37,164 new build homes were built between 1st April 2021 and 31st March 2022.*
There is a high buyer demand for these homes, due to there being no seller chain and no need for immediate redecoration or home improvements.
It can sometimes be slightly harder to get a mortgage for a new build property though, so it is a good idea to speak to an experienced broker before applying.
With the right advice, you should still be able to find a great deal with excellent rates. Our team have years of expertise when it comes to new builds and can find you the best lenders and deals for your new build mortgage.
Mortgages for new builds
A new build mortgage refers to a mortgage on a property that has been built within the last year and has had no previous occupants.
There are many benefits to buying a new build home, especially as they will be unlikely to require maintenance or renovations for several years and you can avoid property chains.
Often with new builds, you can have access to shared ownership schemes that allow you to get on the property ladder far more quickly.
This is because you would be purchasing a percentage share of the property, with the option to buy more shares later. This requires a smaller mortgage and lower deposit amount, leaving this a great option for buyers with a limited budget.
Advantages of buying a new build house
There are numerous benefits to buying a new build property including:
- Access to government Help to Buy schemes
- No seller chain meaning you can move in more quickly
- More energy efficient equalling lower bills
- Little need for redecoration or renovation
- Occasionally developers will cover fees such as stamp duty
- If you buy ‘off plan’ (before the build is complete) you may be able to choose fittings, tiles, flooring etc
Why is help to buy only for new builds?
The government’s Help to Buy equity loan scheme as well as other affordable housing schemes will usually only apply to new build properties. This means you cannot benefit from these schemes if buying an older property.
These schemes were developed by the government in cooperation with property developers, to help people (first-time buyers in particular) to get onto the property ladder.
This means if wanting to take advantage of these schemes you will need to make sure you are buying from a developer who is registered as a part of them.
This is helpful for buyers and increases supply and demand for new properties. It also benefits the economy and boosts job opportunities for builders, contractors, architects etc.
Can you get a mortgage on a new build?
You should be able to get a mortgage on a new build property from many lenders, but some prefer not to lend when it comes to new builds.
This can be because with a brand-new property, the property value could be seen to decrease more quickly. Not all lenders will have this viewpoint though, so if one lender is hesitant to approve your application it is worth approaching others as well.
Speak to one of our experts if you need mortgage advice. With years of experience and a dedicated panel of lenders available, we can search hundreds of deals to find the right mortgage lender for your needs.
How does a mortgage work on a new build?
With new build properties, your mortgage application will work in much the same way as with any other mortgage type. The main difference will be that sometimes you will purchase your property ‘off plan’ meaning you have bought the home before it has been fully built.
This can make the process slightly more complicated, as lenders will find it harder to value the property due it being under construction.
Often, lenders will want a larger deposit (at least 15% of the overall property value). This however can be beneficial as it equals less for you to repay long term.
When do you start paying mortgage on new build?
With any mortgage, your repayments will begin a few weeks after the purchase has completed.
This will usually be the month after the sale has been completed, commonly on the first day of the month but this can vary.
The lender will usually send you a letter confirming your first payment date, so it is best to keep an eye out for this arriving. This should arrive quickly, often within around 5-7 working days of completion.
New build mortgages 10% deposit
With most mortgages, including new build 90% loan to value (LTV) is the standard requirement. That means a new build mortgage 90% LTV should be widely available.
With this you will cover 10% of the property value with your deposit and the other 90% will be covered by the mortgage. As this is a common LTV amount, you should be able to find many lenders offering great deals on this mortgage type.
Learn more about mortgage deposit rules and requirements in our deposit guide.
95% mortgage new build
Generally, 90% LTV mortgages are the standard loan to value with most lenders.
With some new build properties, you might be able to find deals in which you only need to put down a deposit worth 5% of the property’s overall value. This will usually only apply to first time buyer new build mortgages.
If you can find a 95% LTV mortgage deal, it can help you to get on the property ladder quicker due to needing a lower deposit amount. It is important to remember though that a lower deposit will mean you will have a higher amount of loan to pay back.
Best mortgage for a new build house
Our specialist team of mortgage advisors can help you find excellent mortgages for new build houses.
What will be the ‘best’ mortgage will depend on factors like the amount you wish to borrow, length of mortgage term and interest rate.
It will be worth considering all the requirements you have for your mortgage and comparing pricing and terms across providers. Speak to us if you don’t know where to start or have factors such as poor credit history or credit score that might complicate your application.
We can compare mortgage deals across over 50 of the UK’s top mortgage providers, allowing us to access the most competitive pricing available.
Mortgage offer new build
Getting a mortgage offer or ‘agreement in principle’ for your new build property can be very exciting.
Mortgage offers are only valid for around 6 months on average, though certain lenders will extend this slightly when it comes to new builds. They understand delays often happen during construction.
If your lender does not do this automatically and your home will not be ready in time to complete the sale, you may have to request an extension to your agreement in principle. If the lender will not agree, you could have to start the application process again.
If you find yourself in this situation, speak to our expert advisors who can offer you much needed help and support.
New build mortgage broker
When taking out a new build mortgage, it can be helpful to speak to an experienced new build mortgage specialist.
That way you know you are getting the right advice from someone familiar with this type of mortgage.
Our team of skilled mortgage advisers have years of expertise when it comes to helping new build buyers find mortgages with excellent rates. Speak to us make sure you are not paying more than you need to for your mortgage.
*according to UK government statistics