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New Build Mortgages

Find out what you need to know about new build homes, including the involvement when it comes to securing a mortgage.

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What is a new build mortgage?

A new build mortgage is same as a regular mortgage, except the difference being the type of property you are looking to obtain. The term new build is used to describe a property that has recently been constructed and has never been lived in before within the last 2 years and is still owned by the developer.

When considering a new build mortgage, it’s recommended to thoroughly research and understand the terms and conditions, including any potential risks and additional costs that may be involved. Consulting with a mortgage advisor can also provide valuable guidance tailored to your specific situation.

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What deposit do you need for a new build mortgage?

When it comes to new build mortgages, many lenders will require you to have at least a 15-25% deposit. But it can differ as each mortgage lender can have a different lending criteria, so it’s a good idea to speak to a independent mortgage broker to get the latest advice.

The deposit for new build mortgages is generally higher, due to risks like potential overvaluation, market volatility, and uncertainties around the completion of the construction. Lenders require a larger deposit to mitigate these risks, ensuring the borrower has more equity in the property and reducing the lender’s exposure to potential value drops.

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How much can I borrow on a new build mortgage?

The amount you can borrow on a new build mortgage depends on your income, credit score, existing financial commitments, and the lender’s criteria. Your deposit size also impacts the loan-to-value ratio, with larger deposits allowing you to borrow more and secure better interest rates. It’s advisable to obtain an Agreement in Principle (AIP) to estimate how much you can borrow and demonstrate your seriousness about buying a property.

When you find a new build home, you typically need to pay a reservation deposit to secure the property. This is followed by a reservation agreement, outlining the timeframe to secure a formal mortgage offer and complete the purchase. During this period, you’ll finalise your mortgage application, conduct necessary surveys, and complete legal checks.

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New Build Mortgages FAQs

What are the benefits of new build homes?

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New build homes often come with modern amenities and energy-efficient features, reducing maintenance costs and utility bills. They may also be covered by warranties, providing peace of mind to buyers. Additionally, new build properties typically adhere to the latest building regulations and safety standards.

What are the drawbacks of new build homes?

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Drawbacks of new build homes can include potential delays in construction, unfinished developments in the surrounding area, and the risk of snags or defects that may need addressing after purchase. New build properties may also be more expensive than existing homes, and there could be limited room for negotiation on price.

How long does it take to get a mortgage for a new build?

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The timeline for getting a mortgage for a new build property can vary depending on factors such as the lender’s processes, your financial situation, and the completion stage of the property. On average, it can take anywhere from a few weeks to a couple of months to secure a mortgage for a new build.

What is a mortgage agreement in principle?

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A mortgage Agreement in Principle (AIP), also know as a Decision in Principle (DIP) is a preliminary decision from a lender indicating how much they might be willing to lend you based on your financial information. It gives an estimate of your borrowing capacity and helps demonstrate your seriousness to developers when purchasing a property.

Can I use a gifted deposit for a new build mortgage?

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Yes, you can typically use a gifted deposit for a new build mortgage. A gifted deposit is when someone, usually a family member, gives you money to use as part or all of your deposit for a property purchase. However, there are some considerations to keep in mind:

  • Lender Acceptance: Not all mortgage lenders accept gifted deposits, so it’s essential to check with your chosen lender beforehand. Most lenders will require a letter from the person gifting the deposit confirming that the money does not need to be repaid and that they have no legal claim to the property.
  • Anti-Money Laundering Checks: Lenders will usually conduct anti-money laundering checks on the gifted deposit to ensure that the funds are legitimate and not the result of illegal activities.
  • Impact on Borrowing Capacity: While a gifted deposit can help you with your upfront costs, it doesn’t necessarily increase your borrowing capacity. Lenders will still assess your ability to afford the mortgage repayments based on your income, expenses, and creditworthiness.
  • Gifted Deposit Rules: Some lenders may have specific rules regarding gifted deposits, such as the minimum amount that must come from your own savings or restrictions on the relationship between the donor and recipient.

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Getting a new build mortgage can be a daunting experience. We’ll hold your hand all throughout the process.

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We'll recommend appropriate insurance products to ensure you can stay in your home, should you become seriously ill or unable to work.

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Your mortgage advisor will be with you every step of the way.

We'll help you overcome hurdles that you face along the way, for example, removing the stress of property survey and valuation problems.

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