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New-build homes and older properties can both be excellent choices.
From a mortgage perspective, neither is automatically better than the other, though the type of property you buy can affect lender criteria, deposit requirements, valuations and the overall buying process.
If you’re buying your first home or moving home, understanding these differences can help you choose a property that suits your budget and prepare for your mortgage application.
How Do Mortgage Lenders View New-Build Homes and Older Properties?
Mortgage lenders are generally happy to lend on both new-build homes and older properties. Their decision is based on a combination of your circumstances and the property itself.
Some lenders apply specific criteria to new-build homes, particularly flats, which can affect the maximum loan-to-value available. You can read more about whether new-build mortgages are different and what to expect.
Others may take a closer look at older properties if they have non-standard construction, structural concerns or require extensive repairs.
Every lender has its own approach, so comparing your options before applying can make finding a suitable mortgage much simpler.
Can Your Deposit Be Different?
Yes, in some cases.
The deposit you need isn’t determined by the age of a property alone. Mortgage lenders will look at the type of property you’re buying alongside your own circumstances, and their lending criteria can vary.
For example, some lenders apply lower maximum loan-to-value limits to new-build flats than they do to houses or older properties. This can mean you’ll need a larger deposit to meet that lender’s requirements.
Older homes are often assessed using standard lending criteria, provided there are no concerns about the property’s condition or construction.
As lender criteria differs, it’s worth checking what’s available before you begin your property search. Using a mortgage repayment calculator or mortgage affordability calculator can also help you build a realistic budget before you start viewing homes.
Does the Mortgage Process Change?
The overall mortgage process remains much the same, though there can be differences depending on the property you’ve chosen.
If you’re buying a new-build home before it’s finished, there may be a gap between reserving the property and completing your purchase. In some cases, this means your mortgage offer could need extending if construction takes longer than expected.
With an older property, the lender’s valuation may identify repairs or maintenance that require further investigation before a final lending decision is made. This is particularly relevant if the property has visible defects or unusual construction.
Having an Agreement in Principle before making an offer or reserving a property can also give you a clearer idea of your budget and help your purchase progress more smoothly.
What Else Should You Compare?
The mortgage is only one part of the overall cost of buying a home.
Running costs, maintenance, energy efficiency and future repair work can all influence how affordable a property is after you’ve moved in.
A home with a lower purchase price isn’t always the least expensive to own over time, while a newer property may come with fewer maintenance costs during the first few years.
If you’re interested in how these savings can add up, take a look at our guide on why buying a new-build home could save you money.
Considering both the purchase price and the ongoing costs can help you decide which property is the better fit for your circumstances.
Speak to a Mortgage Broker Before You Decide
Choosing between a new-build home and an older property doesn’t have to mean limiting your mortgage options. The most suitable lender will depend on your income, deposit, credit history and the property you’re planning to buy.
As a mortgage broker, we compare mortgages from a wide range of lenders, taking both your circumstances and your chosen property into account.
If you’re deciding between a new-build home and an older property, our mortgage advisors can help you understand your mortgage options before you move forward with your purchase.
