Table of Content
What Are New Build Mortgages?
New build mortgages are home loans specifically designed for purchasing newly constructed properties. Lenders often have stricter criteria for new builds compared to older homes due to the perceived risks, such as potential delays in construction and valuation fluctuations. However, there are various options available for buyers looking to secure a mortgage for a new build property.
How Much Deposit Is Needed for a New Build?
The deposit required for a new build mortgage depends on whether you are purchasing a house or a flat:
- New Build Houses – Many lenders require a minimum 15% deposit, though there are some exceptions.
- New Build Flats – Lenders typically ask for a 20-25% deposit, as flats are considered higher risk due to potential fluctuations in market value.
While higher deposit requirements are common, there are ways to reduce the amount needed, making new build properties more accessible.
Using Developer Discounts to Boost Your Deposit
Some developers offer incentives and discounts, which can help meet deposit requirements. These discounts can be applied toward your deposit, effectively reducing the amount of personal savings needed.
For example:
- Property Market Value: £200,000
- Developer Gifted Equity: £10,000 (5% discount)
- Your Personal Deposit: £10,000
- Total Deposit Considered by Lender: £20,000 (10% LTV Mortgage)
Many lenders will accept these incentives as part of the deposit, making it easier to meet the required deposit criteria.
Looking for 5 star mortgage advise? We’re ready to help.
Whatever stage you’re at, it’s never too early to reach out.
View all 53 reviews on Trustpilot
5 star based on 197 Google reviews
What to Look Out for When Buying a New Build
- Short Exchange Deadlines – Developers may require contracts to be exchanged within 28 days, which means you need to move quickly. While some developers are flexible, expect pressure to act fast.
- Mortgage Expiry Risks – Most mortgage offers are valid for six months, but delays in construction can occur. If the property isn’t ready within this timeframe, you may need to reapply for a mortgage, potentially affecting your interest rate or affordability.
- Developer Discounts and Mortgage Valuations – Discounts and incentives are beneficial, but lenders usually cap these at 5% of the purchase price. If incentives exceed this amount, they may adjust the property valuation, impacting your mortgage amount and loan-to-value (LTV) ratio.
The Process of Buying a New Build with a Mortgage
- Book a Consultation with a Mortgage Broker – A broker can help assess affordability and mortgage options.
- Get Mortgage Ready – Secure an Agreement in Principle (AIP) before making an offer.
- Reserve Your Property – Developers usually require a reservation fee (£500-£1,000+), which is often deductible from the final purchase price.
- Instruct a Solicitor – Ensure you work with a solicitor experienced in new build purchases.
- Apply for a Full Mortgage – Submit a mortgage application and prepare for the legal process.
- Exchange Contracts – Aim to complete all legal requirements within 28 days to avoid delays.
- Prepare for Completion – Monitor build progress and confirm the mortgage remains valid if construction delays occur.
Outstanding service and clear communication are at the core of what we do. But don’t just take our word for it—read firsthand experiences from our clients and discover why they rate us a 5-star mortgage broker.
Pros and Cons of Buying a New Build Property
Pros:
- Energy Efficiency – New builds are designed to meet modern energy efficiency standards, reducing running costs.
- No Chain – Buying a brand-new home eliminates the complications of a property chain.
- Developer Incentives – Potential discounts, stamp duty contributions, or furniture packages.
- New Home Warranty – Most new builds come with a 10-year NHBC or equivalent warranty.
Cons:
- Higher Deposit Requirements – Compared to older properties, deposits are typically higher.
- Potential Delays – If construction runs over schedule, mortgage offers may expire.
- Premium Pricing – New builds often come with a premium price compared to similar existing properties.
5.0 based on 197 Google Reviews
Speak to new build mortgages expert for the best deal.
Why Use a New Build Mortgage Broker Like Strive Mortgages?
At Strive Mortgages, we specialize in securing mortgages for new build properties. Our expertise allows us to:
- Find lenders who accept lower deposits
- Navigate lender criteria for new builds
- Secure exclusive mortgage rates and deals
- Handle applications from start to finish
FAQs
Yes, but options are limited. You may need to use a government scheme or a developer incentive to bridge the gap.
A new build warranty is an insurance policy covering structural defects for up to 10 years, provided by organizations such as NHBC, Zurich, or Premier Guarantee.
Some lenders offer 90% LTV mortgages for new build houses, but options are more restricted for flats.
If you’re considering a new build mortgage, Strive Mortgages can help you find the best deal. Contact us today to explore your options and start your home-buying journey!
Strive Mortgages saves you time, hassle & money
Jamie Elvin
Jamie is an expert in all things mortgages, and our most experienced broker. Connect with Jamie and get started to see how Strive Mortgages can help you.
