A Guide to New Build Mortgages
Purchasing a new build home can be an exciting journey, offering you the chance to own a property that’s brand new and move-in ready.
New build properties are appealing for many reasons: they often come with the latest design features, modern construction methods, and energy-efficient materials.
However, securing a mortgage for a new build home can present a few additional factors to consider compared to buying a standard property.
Our team is here to provide you with clear, personalised advice, making the experience as smooth as possible.
What is a New Build Mortgage?
A new build mortgage is specifically designed for homes that have been built or significantly renovated within the last two years and have had no previous owners.
If you’re buying a home that’s fresh off the market, or even “off-plan” (purchasing before the property has been fully constructed), you will likely need a mortgage tailored for this type of purchase.
Lenders may have slightly different criteria for new build homes, as they may require higher deposits due to the potential volatility in property valuations.
However, with proper advice from Kerr & Watson, we can help you understand these requirements and find the best deals available to you.
Why Buy a New Build Home?
There are several benefits to purchasing a new build property, making it an attractive option for first-time buyers, families, and professionals alike. Here are some key advantages:
- Move-in Ready: New build homes are completely ready for you to move into, meaning no need for renovations or redecorating.
- Energy Efficiency: Modern construction standards mean new build properties are more energy-efficient, potentially lowering your utility bills.
- Customisation: Many developers allow buyers to personalise elements of their home, such as kitchen fittings or bathroom tiles, giving you a house tailored to your preferences.
- No Upward Chain: Buying a new build means there’s no seller chain to deal with, which can significantly speed up the buying process as there should be less people involved.
- Government Schemes: New build homes often qualify for government schemes such as Shared Ownership or Deposit Unlock, helping you get on the property ladder with a smaller deposit. Schemes change and get removed over time so they may not always be available when you come to buy your home. You would also need to check criteria to make sure you qualify for any potential schemes.
Despite these advantages, it’s important to understand the potential challenges with financing a new build home.
Challenges of Securing a New Build Mortgage
While new build homes are appealing, obtaining a mortgage for one can be a bit more complex. Here are a few key points to keep in mind:
- Potential Higher Deposits: Some lenders require a higher deposit for new build homes, often between 10-15%. In some cases, new build flats may require an even larger deposit, sometimes up to 25%. This is not the case with all lenders so take individual advice.
- Valuation Concerns: Lenders may have concerns over the valuation of new build properties, particularly if you’re buying “off-plan” before the property is completed. This can sometimes result in lenders offering lower loan-to-value (LTV) ratios.
- Mortgage Offer Time Limits: When buying off-plan, there may be delays in construction, meaning your mortgage offer (usually valid for 6 months) could expire before you complete the purchase. At Kerr & Watson, we can help you look for lenders with extended offer periods, if this is a concern.
Find out Your Options
How Kerr & Watson Can Help
At Kerr & Watson, we understand that securing a new build mortgage requires expert knowledge and a personalised approach. Here’s why working with us can benefit you:
- Access to Specialist and High Street Lenders: We work closely with a network of lenders who specialise in new build mortgages, ensuring we can match you with the best options based on your individual circumstances.
- Tailored Advice: We assess your financial situation in detail, helping you understand what deposit size is required, what mortgage schemes are available, and how much you can afford to borrow.
- Guidance on Government Schemes: If you are eligible for schemes such as Shared Ownership, First Homes, or Deposit Unlock, our team will provide advice on how these can help reduce your deposit requirements and make your new build home more affordable.
- Support Throughout the Process: From getting a mortgage in principle to dealing with developers and solicitors, we are with you. We ensure that you meet deadlines, and we handle the technical details, leaving you to focus on the excitement of your new home.
At Kerr & Watson, we pride ourselves on making the mortgage process as simple and stress-free as possible.
Government Schemes for New Build Mortgages
Schemes change over time and get removed too so they may not be available when you come to buy. We can guide you in this area at the time.
Some basic details on UK house buying schemes as follows:
- Shared Ownership: This scheme allows you to purchase a percentage of the property and pay rent on the remaining share. It’s a great way to get on the property ladder with a smaller deposit.
- Deposit Unlock: Available through certain developers, this scheme allows you to purchase a new build home with just a 5% deposit. It’s designed to make home ownership more accessible for first-time buyers and home movers.
- First Homes Scheme: This scheme offers a discount on the market value of new build homes, helping first-time buyers and key workers purchase homes at a more affordable price.
Each of these schemes has its own eligibility criteria, and it can be challenging to determine which one is best for your situation.
Conclusion
Buying a new build home is an exciting opportunity, but the mortgage process can be a little more complex than with older properties as lenders may have criteria that catches you out when buying a new build property.
From larger deposit requirements to managing tight deadlines, having expert advice from Kerr & Watson can make the difference.
Our team of mortgage specialists will help you to secure the best mortgage deal for your individual situation.
Contact Kerr & Watson today for personalised, bespoke mortgage advice.
