New Build Mortgages

A new build mortgage is a type of mortgage specifically designed for purchasing newly constructed properties in the United Kingdom. Whether you're a first-time buyer or looking to invest in a brand-new home, understanding the unique features and considerations of new build mortgages is essential in navigating the property market.

Key Features of New Build Mortgages:

1. Specific criteria:
Lenders may have criteria that differs from their standard specifically for new build or newly converted properties.  These differ from lender to lender.  Some can be of benefit and some can be a little more restricting.  It depends upon the individual lenders appetite for risk and funder restrictions.  It's best to double check what the lenders rules are when buying off plan and re marketing or re financing within six months pof completion.

2. Deposit Requirements: 

While deposit requirements may vary depending on the lender and the specific mortgage product, buyers of new build properties typically need to provide a deposit ranging from 5% to 20% of the property's value.  There can be additional requirements and limitations around deposits on new build flats.  Some developers may offer incentives, such as to pay the stamp duty the inclusion of turf and white goods.  (See below)

3. Stage Payments (Self Build): 

In some cases, particularly with off-plan purchases where the property is not yet completed, lenders may release funds to the developer in stages as construction progresses. This arrangement, known as stage payments or drawdowns, helps ensure that funds are released in line with the completion of key construction milestones.

4. Valuation and Warranty Requirements: 

Lenders will require a valuation of the property to assess its value and suitability as security for the mortgage. Additionally, many lenders require new build properties to have a structural warranty, such as the NHBC Buildmark warranty, to provide protection against defects in construction. 

5. Incentives and Deals: 

Developers of new build properties often offer incentives to attract buyers, such as cashback deals, stamp duty contributions, or assistance with legal fees. Buyers should carefully consider these incentives in conjunction with their mortgage options to ensure they're getting the best overall deal.  These must be checked before case submission and declared to the lender at application to avoid complications or delays at underwriting stage.  Most lenders have a 5% any incentive value over this is generally deducted from the property value.  Every lender will have their own policy regarding this issue.

Considerations When Applying for a New Build Mortgage:

6. Builder's Reputation: 

When purchasing a new build property, it's essential to research the reputation and track record of the builder or developer. Choosing a reputable builder can provide assurance of quality construction and timely completion of the property.

7. Completion Dates: 

It's important to consider the estimated completion date of the property when applying for a new build mortgage, especially if purchasing off-plan. Ensure that your mortgage offer aligns with the anticipated completion timeline to avoid any delays or complications.

8. Mortgage Options: 

Explore different mortgage options available for new build properties, including fixed-rate mortgages, variable-rate mortgages, and government-backed schemes or lender deposit initiatives.  Compare interest rates, terms, and fees from various lenders to find the most suitable mortgage for your needs.

9. Budgeting for Additional Costs: 

In addition to the purchase price of the property and the deposit, buyers of new build properties should budget for additional costs, such as legal fees, survey fees, and moving expenses. Factor these costs into your budget when planning for your new build purchase.

Conclusion:

New build mortgages offer buyers in the UK the opportunity to purchase newly constructed properties with tailored financing options and incentives. Whether you're a first-time buyer or an experienced homeowner, navigating the new build property market requires careful consideration of factors such as deposit requirements, stage payments (self build), and builder reputation. At Nurture FS we're here to help you navigate the complexities of new build mortgages and find the best financing solution for your new home. Contact us today to explore your options and take the next step towards homeownership in a brand-new property.

Your home may be repossessed if you do not keep up repayments on your mortgage.