New Build Remortgage
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New Build Remortgage
First of all, why remortgage my new build property? What are the reasons for remortgaging?
One of the primary reasons for remortgaging or reviewing your mortgage is that you’re coming to the end of a fixed rate product with your existing lender. Having a look at the options available at that point is a key reason to remortgage or review.
It might be that you purchased using the Help to Buy scheme. For the first five years you don’t pay any interest on the equity loan. But from year six, they start charging you interest. We’re now seeing people come to us for a remortgage to pay back the Help to Buy loan they took out to purchase the property.
Help to Buy is no longer available on new purchases, so this is specifically for people who already have the scheme on their property and are looking to remortgage [podcast recorded in January 2025]
How does remortgaging for a new house work? How long do you have to own a new build property before you can remortgage?
If you’ve had the property for two years and you’re on a two-year fixed rate, we would need to have a look at the value of the house, as we would in any situation. We would see where the current value of the property is versus what you paid for it as a new build. That can differ slightly versus a second-hand property.
In terms of how long you’d have to have owned the property before you can remortgage it, most lenders want you to have owned it for six months. That’s more about money laundering rules than anything else. Some lenders might potentially look at a shorter period of time than that.
Can you remortgage a new build with no proof of income?
No. You can’t take a mortgage out in this country without proof of income.
Can I remortgage my new build property if I have bad credit?
In theory, that’s certainly possible. We need to have a look at what’s happened, when, what’s showing on the credit report now and what the credit score looks like.
The level of bad credit would determine the interest rate a lender might charge. Some lenders will accept a certain level of bad credit and then they’d step away. But at the moment there are certainly a number of lenders that sit just behind the high street and cater for clients with bad credit.
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Can I be declined a remortgage on my new build property? Why would this happen?
Possibly. It might come back to what we mentioned about house value. As an extreme example, let’s say you bought a house two years ago as a new build and you put a 5% deposit down.
If the new build price that you paid at the outset was a little bit high, it might be that its value has come down a bit. There won’t then be the scope to remortgage with a different lender because there’s not enough equity in the property.
That would probably be one of the main reasons. Reduced income or bad credit could also have an effect, but that wouldn’t be specific to a new build property.
How can I better my chances of a good remortgage?
As with anything, preparation is important. Get a copy of your credit report and see what you’ve got outstanding on finance.
If you’re employed, make sure you’ve got recent bank statements and pay slips, and that they have the correct address. If you’re self-employed, get up to date with your self-assessment tax returns. Being well organised with your documentation is key.
What are the benefits of remortgaging?
A key benefit is that you don’t go onto your existing lender’s standard variable rate. Most people that buy a property take a fixed interest rate to a specific date.
When you get to that date, if you don’t do anything, you would continue with that lender at a significantly higher interest rate. Avoiding the lender’s standard rate is a big benefit. Remortgaging also gives you the opportunity to borrow extra money for things like home improvements.
How can a mortgage broker help here? Is there anything else we need to know?
If you’re coming to the end of a fixed product, don’t just go back to your existing lender and just take the product that they have on offer for you. There are so many different lenders and options out there now.
Speak to a mortgage broker who has access to the whole market of lenders and can advise you on remortgaging. It may be that you want to take extra money out.
We will explain what it would look like through a mortgage – but also that there are potentially other options that don’t involve a mortgage. We can prompt you to think about other ways to do that. A mortgage broker can certainly add a lot of value in the process of remortgaging.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.