Here’s what you need to know if you’re considering financing a brand-new home.

1. Understanding New Build Mortgages: Mortgages for new build properties can differ slightly from those for existing homes. Lenders often have specific products tailored for new builds, which can include both houses and apartments. These products might have different criteria or incentives, like extended offer periods, to accommodate the longer timescales often involved with new build purchases.

2. Mortgage Offers May Be Valid for Longer: When buying a new build, there’s often a gap between reserving the property and the actual completion date. This can sometimes be several months, depending on the stage of construction when you make your purchase. To account for this, some lenders offer longer mortgage offer periods—sometimes up to six months or more—giving you extra time to complete the purchase without the need to reapply or renegotiate your mortgage.

3. The Importance of a Larger Deposit: Lenders often view new builds as a slightly higher risk, partly because property values can sometimes dip in the short term after purchase. As a result, they may require a larger deposit—often 10% to 15%—compared to the 5% that might be acceptable for an existing property. A larger deposit not only makes you more attractive to lenders but can also secure you a better interest rate.

4. Incentives and Deals from Developers: Many new build developers offer incentives to attract buyers, such as covering legal fees, offering upgrades, or even contributing towards your deposit. While these can be enticing, it’s important to consider how they might impact your mortgage. Some lenders may adjust their valuation of the property if significant incentives are included, potentially affecting how much they’re willing to lend.

5. Help to Buy and Other Schemes: If you’re a first-time buyer or if the new build is your primary residence, you might be eligible for government-backed schemes like Help to Buy. These schemes often require a smaller deposit and can make new builds more affordable. However, it’s crucial to understand the terms and conditions, such as repayment expectations or equity share agreements, to ensure they align with your long-term financial goals.

6. The Role of a Mortgage Broker: Given the unique aspects of financing a new build, working with a mortgage broker can be particularly advantageous. Brokers have access to a wide range of lenders, including those who specialize in new build mortgages. They can help you navigate the complexities, secure the best rates, and ensure your mortgage offer aligns with the expected timeline of your property’s completion.

In conclusion, while buying a new build property offers many advantages, the mortgage process can be a bit different from purchasing an existing home. By understanding the specifics—such as longer offer periods, deposit requirements, and potential developer incentives—you can navigate the process smoothly and secure the best possible mortgage for your new build dream home.

If you’d like more information or advice on mortgages for new builds, or if you’d like to book a free mortgage advice appointment with our Mortgage Broker James, please get in touch

Call us on 01777 808777

Email us at james@nc-fs.co.uk

Click the image below