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When buying a new build, it’s common for developers to sweeten the deal — offering things like cashback, free upgrades, stamp duty contributions or even legal fees covered. These new build incentives can be a great bonus, but they also affect how your mortgage application is assessed.
At Strive, we specialise in new build mortgages. We’ve helped hundreds of buyers understand how incentives fit into lender criteria — and how to make sure they don’t reduce your borrowing power or delay your application.
Here’s how developer incentives really work, what lenders think about them, and how to make sure your deal still stacks up financially.
How do new build incentives work?
Developers often use incentives to make their properties more appealing — especially when there’s competition in the area or they’re trying to meet quarterly sales targets. Common incentives include:
- Stamp duty contributions (SDLT paid by the developer)
- Cashback or deposit contributions
- Free legal fees or valuation fees
- Part-exchange deals
- Upgrades or extras such as flooring, appliances, or landscaping
These incentives can help reduce your upfront costs and make the move more affordable. But lenders don’t always view them the same way you do.
Some incentives, like flooring or integrated appliances, are considered part of the property and don’t usually affect lending. Others — especially financial incentives like cashback or stamp duty contributions — can impact how your property is valued for mortgage purposes.
You can read more about what developers typically offer in our new build mortgage guide.
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How incentives affect your mortgage valuation
Here’s where it gets important: most lenders allow incentives up to 5% of the purchase price without issue.
If the incentive package is worth more than that, the excess is deducted from the property’s value for lending purposes.
Let’s look at an example:
Example:
- Purchase price: £100,000
- Developer incentives: £10,000 (10%)
Only the first 5% (£5,000) is acceptable. The extra £5,000 is deducted from the value.
So, your mortgage would be based on £95,000, not £100,000.
That means if you’re putting down a 10% deposit, you’d need 10% of £95,000 (£9,500), and cover the rest yourself.
Some lenders cap total incentives at 10%, but anything above 5% usually gets factored into the loan-to-value (LTV) calculation.
This is where having your own deposit is crucial — you’ll typically need at least 5% of your own funds, not just a builder contribution.
Common types of acceptable incentives
Most lenders are comfortable with the following:
- Builder or developer deposit contributions
- Cashback (as a single lump sum)
- Stamp duty contributions
- Free legals or valuation fees
- Part exchange (within market value)
- Upgrades that form part of the property, such as:
– White goods or kitchen upgrades
– Floor coverings and lighting
– Bathroom improvements
– Additional sockets, TV points, or electric upgrades
– Solar panels or landscaping
Incentives like these are standard across new build sites, but the way they’re treated can vary slightly by lender.
You can check the best new build mortgage lenders for up-to-date examples of how each provider handles incentives, build stages, and warranty requirements.
How different lenders view developer incentives
Here’s how some of the UK’s main lenders approach new build incentives:
| Lender | Policy Summary |
|---|---|
| Nationwide Building Society | Incentives up to 5% of the purchase price or valuation (whichever is lower) are acceptable. Anything above 5% is deducted from the valuation, and lending is based on the reduced value. |
| HSBC | Financial incentives up to 5% are acceptable. Any amount above 5% must be deducted from the purchase price for LTV calculations. |
| Barclays | Accepts builder incentives up to 5%. Borrower must contribute at least 5% of the purchase price from their own funds. Incentives over 5% are deducted from the valuation. Upgrades integral to the property (kitchens, flooring, lighting) don’t count toward the 5%. |
| Skipton Building Society | Incentives up to 5% are acceptable. If over 2%, max LTV may reduce by 5%. Incentives above 5% are declined. Buyer must contribute at least 5% of their own funds. No vendor-funded deposits accepted. |
Can you add stamp duty to your mortgage?
Incentives like stamp duty paid by the developer can ease your cash flow, but you can’t add stamp duty to your mortgage directly. Lenders will only fund the property price (minus unacceptable incentives).
That’s why it’s important to plan your deposit, fees, and incentives carefully — so you’re not short of funds on completion day.
If you’re unsure how your lender views stamp duty or SDLT incentives, Strive can guide you through it. We’ll confirm which parts of your package are acceptable and ensure your loan is based on the correct figures.
Builder gifts and deposits
Builder gifts are common, and most lenders accept them as long as:
• They don’t exceed the 5% limit, and
• You’re contributing at least 5% of your own funds (which can include a family gift).
Some lenders do cap total incentives at 10%, but anything over 5% will affect the property’s value for mortgage purposes.
So, if you’re getting a combination of cashback, stamp duty paid, and legal fees covered — check the total percentage. It could mean you’re borrowing less than expected if you go over the limit.
Why it’s important to disclose incentives early
It’s important to let both your mortgage lender and solicitor know about any incentives right from the start.
When a developer offers extras — like cashback, paid stamp duty, or upgrades — they’ll complete a CML Disclosure of Incentives Form (also known as a UK Finance Disclosure Form). This document lists every incentive linked to your purchase, so the lender understands exactly what’s included in the price.
Lenders use that form to confirm the property’s true market value and decide how much they’re comfortable lending. If an incentive isn’t disclosed early, it can lead to delays, extra valuation checks, or, in some cases, a revised mortgage offer.
Sharing everything upfront simply keeps things transparent and avoids last-minute surprises for you, your solicitor, or the lender.
How Strive can help
At Strive, we understand how developer incentives fit into the mortgage landscape. We’ll:
- Review your full incentive package to see how lenders will view it
- Recommend lenders who are flexible with incentives or offer longer new build mortgage offer validity
- Manage communication between your solicitor, developer, and lender
- Structure your application so your LTV, deposit, and borrowing remain in line with your goals
We specialise in new build mortgages, and work closely with both buyers and developers to make the process smoother — whether it’s understanding incentives, planning around build completion, or managing mortgage timing.
To learn more about how new build lenders assess properties and offers, visit our new build mortgage guide or explore new build warranty requirements for what happens after completion.
Final thoughts
Developer incentives can make buying a new build more affordable, but they also come with rules that affect how much you can borrow. Staying within the 5% limit — and ensuring part of your deposit comes from your own funds — helps keep your mortgage application straightforward.
At Strive, we help you understand what’s acceptable, what’s not, and how to structure your new build purchase the right way.
If you’re buying a new build and want to be sure your incentive package won’t slow things down, talk to Strive — the UK’s new build mortgage experts.
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.
