New build mortgages
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New build mortgages
There’s no shortage of reasons to buy a new build home; they’re modern, energy-efficient, can be built to your specifications and there’s something special about knowing you’re the very first person to live there. It’s easy to see why new builds are becoming the ‘go to’ choice for everyone from first time buyers and young professionals, to growing families and retirees. But, if you want to buy a new build home, you’ll need a new build mortgage.
At Everest Mortgage, we’ll guide you through the process of getting a new build mortgage, helping you to navigate lenders’ criteria, deadlines and deposit requirements.
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What is a new build mortgage?
If you’re buying a new build home, you’ll need a new build mortgage. This is a mortgage used to buy a property that has been built – or significantly renovated – within the last two years, and has never been lived in or sold before. These homes are usually built by major developers and they’re in high demand, with buyers quickly snapping them up as soon as they hit the market.
Though new build mortgages are similar to traditional mortgages, there are often additional hoops to jump through, especially if you’re buying an off-plan property. This is why it’s helpful to work with an expert broker, like Everest Mortgages.
How does a new build mortgage work?
A new build mortgage isn’t vastly different to a standard fixed rate mortgage or flexible mortgage, but there are some nuances to be aware of. As many new build homes are sold off-plan – meaning you agree to buy the property before construction is finished – the property isn’t fully complete at the time of application, so lenders can find it more challenging to carry out an accurate valuation. This means they sometimes ask for a larger deposit.
There’s also the issue that many mortgages for new builds aren’t valid for as long, usually around six months, which can become an issue if there are unexpected delays. This is something the Everest Mortgages team can help you with.
Why are new build mortgages slightly different?
Some lenders see new build properties as being riskier to lend on. This is due to the fact that the property values can drop if the developer releases many homes at once, and because off-plan builds can face delays, meaning mortgage offers expire before they’re used.
This doesn’t mean getting a mortgage on a new build is difficult, it just means it’s important to apply to lenders who understand the new build market. This is something we can guide you on.
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5 reasons buyers love new builds
- You don’t have to worry about moving in and immediately being faced with home improvement demands, as new builds are built to spec. This means you can select the home that ticks the right boxes.
- There’s no denying that new kitchens and bathrooms can be expensive, and you’ll have to cover this cost if you move into a property in desperate need of upgrades. With a new home, the kitchen and bathroom are brand new.
- Many new build estates are built close to local amenities, and some even have their own purposely built for residents to use. This includes shops, schools and roads.
- There’s a lot of design freedom that comes with buying a new build, especially when it comes to fixtures and fittings. You can choose the finishing touches that suit your taste.
- As the home is brand new, there’s no onward chain. You don’t have to worry about a seller causing delays and slowing your moving journey down.
How to apply (and be approved for!) a new build mortgage
Find out how much you can borrow
Before you do anything else, speak to a mortgage broker and find out how much you can borrow. This is based on affordability, which looks at your income, outgoings and credit history.
Find your dream new build property
Look for a property that works for your lifestyle and budget, paying close attention to living space, the number of bedrooms and garden size. Once you’ve found your dream home, you can put an offer in and cross your fingers it’s accepted.
Get a mortgage agreement in principle
Working with your mortgage broker, you need to get a mortgage agreement in principle. You can then submit your mortgage application to the lender.
Go through the legal process of buying
Once your application has been accepted, you go through the standard legal process of buying a property. As long as there aren’t any delays, you’ll be a proud homeowner and able to move in once the new build is complete.
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Work with a specialist new build mortgage broker
Securing a mortgage for a new build home can feel more complex than buying an older property. From tighter lender criteria to short mortgage offer deadlines, and the potential for construction delays, there are several unique factors to consider. That’s where a specialist new build mortgage broker comes in.
Buying a new build is exciting, but it’s also fast paced, and properties don’t hang around for long. Working with an experienced broker ensures you get expert support from start to finish, giving you a smoother path to buying a home. At Everest Mortgages, we understand the nuances of the new build mortgage market, and we can open the door to lenders and rates you may not find on your own.
Frequently asked questions
Do I need a bigger deposit for a new build mortgage?
Yes, you will usually need a slightly larger deposit to buy a new build home. Most lenders prefer you to have a deposit of around 10% to 15%, and low deposit mortgages are less common. This is because new homes can be seen as riskier due to potential for the property valuation to change after completion.
Can first time buyers get a new build mortgage?
Yes, and many first time buyers purposely seek out new build properties. New build mortgages can be a good way to get on the property ladder.
What is an off-plan property?
When you buy a new build home off-plan, it means you’re buying the property before it’s fully built. You might even be buying before construction has begun. This gives you access to brand new homes early.
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