New Build
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- We’ll find you the most suitable mortgage for you, searching the whole of the market to find the right deal with the right lender.
- Available to assist clients across the UK with a variety of mortgage needs, from First Time Buyer, Home Mover, and Remortgage and everything in between.
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New Build Mortgages
Is it hard to get a mortgage for a new build?
I wouldn’t say it’s hard to get a mortgage for a new build, no. There are certain areas that differ slightly from buying a second-hand property. A key area with certain lenders is the amount of deposit.
We would always recommend speaking to an advisor that has experience within the new build market. We can look at your circumstances and guide you to the most appropriate lender.
What is the new build mortgage process?
The main difference from the standard mortgage process is in the people you’re dealing with. Instead of dealing with an estate agent, as the purchaser you will be dealing with the builder and developer.
Once you’ve actually agreed to purchase the property, the mortgage process itself is identical to that if you were buying a secondhand property.
How long does the new build application process take?
Again, it’s similar to purchasing a property secondhand. The time it takes for the lender to process and approve your application is essentially the same.
The only thing that may differ is that the whole process may take longer – because new builds are released for sale quite far in advance, and the property may not be built yet. That could obviously make the process longer, but not specifically the mortgage application.
What deposit do I need and how much can I borrow? Can you get a 5% mortgage on a new build?
Certain lenders may require a 15% deposit on a new build. But there are other lenders that are far more open to lending on new build properties, where you can look at getting a mortgage with a 5% deposit.
How much you can borrow is all based around affordability. Similar to buying secondhand property, the lender’s going to look at your income and your committed outgoings. Generally, there wouldn’t be much difference between what you’re able to borrow on a new build house versus a secondhand house.
Are there any other incentives available for new build homes?
Sometimes you’ll find that as part of the package on a particular site or plot, builders offer the purchaser some incentives. That might include a contribution towards solicitors’ fees, or even a contribution towards your deposit.
If stamp duty is relevant on the purchase, some builders can contribute towards that, as well. You don’t usually find incentives like these attached to buying a secondhand property. It’s one of the advantages of a new build.
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What schemes are available on new build properties?
There are various affordable housing schemes. A common option is shared ownership where you would purchase a percentage of a new build house and pay rent on the proportion of the property you don’t own.
On other schemes, a house can be sold at a percentage of its market value. It might be capped at 70% or 80% of market value. Usually with those schemes, there are restrictions on who is eligible to buy the properties. It may be that you have to live and work in the area, or have a family connection with it.
A recent addition to the schemes available is Own New, which has been released through certain builders and advisors. It can help reduce the interest on your mortgage and boost the deposit you have available.
Can I get a mortgage on a new build with bad credit?
Yes, that should be possible. As with other types of properties, your advisor would need to look into more detail around what went wrong and when the credit issues happened.
We would generally ask for a copy of your credit report, to help us guide you through the process and check your eligibility for a bad credit mortgage on a new build house. That can also link in with the deposit side of things.
Sometimes, depending on the level of bad credit, the lender may ask for a slightly bigger deposit. Again, an advisor can look at all the different lenders in the market and guide you to the best one available for you.
How do I remortgage my new build property?
We would always recommend seeking out an advisor when looking to remortgage. Some of the schemes Tom mentioned earlier are only available via specific lenders, so to remortgage you would have to use one of those few lenders.
Generally, though, when you’ve purchased a new build you would be looking at the whole of the market, in line with your individual circumstances. Get in touch with an advisor, let them assess your situation, and they’ll take you from there.
What are the pros and cons of getting a mortgage on a new build?
One pro, as we mentioned, is the ability for the developer to incentivise you by paying legal fees or contributing towards deposits and stamp duty.
Another pro is that you’re buying something brand new that comes with a warranty. You have peace of mind that for the next 10 or 15 years, if anything substantial were to go wrong with the property, you can call upon the builder’s warranty.
One of the downsides is that, a bit like purchasing a new car, new build sites are often priced slightly higher than comparable secondhand properties. If you were to buy a new build house and own it for two years, and then you want to sell it or remortgage, its value may not have kept pace with other properties around it on the secondhand market.
There’s always that premium to pay for a new build property. But if it’s going to be somewhere to make your home for the next five to ten years, that’s less of an issue.
How can a mortgage broker help me get a mortgage on a new build home?
A mortgage advisor or broker is here to guide you throughout the whole process. We explain affordability and the different schemes available, and we can identify which lender and product will be most appropriate for your needs.
You could just go direct to your own bank or building society, but they won’t be qualified to give that depth and breadth of advice throughout the process. So the value with a mortgage advisor is in finding the best product for you, and also being there until you move into the house – and beyond.
Here at Thomas Nicholas, after completion we are proactive in keeping in touch with our clients for remortgaging and looking at rates in the future. We offer continuity and advice throughout the life of the mortgage.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
