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A Guide to New Build Mortgages

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 22, 2022

Mortgages for new build properties have a reputation for being more difficult to arrange but, at the time of writing, a recent rise in the number of new homes being constructed has led to increased demand for them and mortgage lenders are starting to take note. 

With the right guidance from a new build mortgage advisor, you should be able to secure a suitable and competitive deal for the new build house or flat you’ve set your sights on, and our guide to new build mortgages will tell you everything you need to know about this

What is a new build mortgage?

Any mortgage taken out on a newly-built property (meaning usually within the last 12 months) that has not been owned and occupied by a previous owner would usually be classed as a new build mortgage, although the definition can vary among lenders.

It may, in some cases, refer to a mortgage that is taken out before construction on the property has been fully completed, but this won’t always be the case.

Don’t confuse new build mortgages with a mortgage to build a new house, which is related to self build homes rather than newly-constructed properties and is, therefore, an entirely different type of product.

How to get a mortgage on a new build

Here are the steps to follow to kickstart your new build mortgage application…

  • Find out whether the property is a leasehold or freehold: Some new builds are leasehold properties, and if this applies to yours, you should read up on the implications of this in our guide to leasehold properties.
  • Think about the timing of your offer: With new build properties, there may be an opportunity to buy off plan and save money. See our guide to buying a property off-plan for further information.
  • Get your documents ready: You can find out what documents you’ll need to apply for a mortgage in our guide to mortgage applications. Downloading your credit reports is also recommended so you can challenge any inaccuracies and have any outdated information removed.
  • Speak to a mortgage broker: Speaking to a mortgage broker who specialises in new build transactions is highly recommended before you proceed to full application. They can offer you bespoke advice, guide you through the application process and make sure you get the best deal. Make an enquiry and we’ll match you with the perfect broker for your needs and circumstances.

When to apply for a mortgage on a new build

It’s fairly common for buyers to commit to purchasing properties that are not yet completed, and building projects frequently over-run. This can present some challenges when considering the timing of your application, as applying too early could result in your mortgage offer expiring, potentially leaving you with sunk costs.

If you think that building issues may cause your timescale to slip, it’s therefore really important to check the validity period before you commit to a particular product. In some cases a lender may agree to extend an offer, but this is not guaranteed.

New build mortgage 9 months validity

Most standard mortgage offers are valid for six months, but some products may have longer validity periods. A few lenders have now introduced products specifically tailored for buyers in the new build market, with validity periods of 9 months or more from the date the offer is made, which may give you additional peace of mind.

Speak to a specialist mortgage advisor if you are concerned about the timing of your application, as they have handled many such transactions before.

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Is it harder to get a mortgage on a new build?

Getting a mortgage for a new build can occasionally take longer and be more complicated than taking one out on a more standard property, and you might have a more limited choice of lenders: while all providers take a slightly different view on new builds, some prefer to steer clear of them altogether.

This is for a variety of reasons, but perhaps the biggest concern for mortgage providers is that these properties can be difficult to value: buyers are seen to be paying a ‘premium’ for a brand new home, which will usually drop when the property changes hands – but the exact amount of value it loses (if any) can be highly unpredictable.

Added to this, when buying a brand new property you are more likely to be benefiting from a scheme such as Help to Buy, or from a financial incentive offered by the developer. Both can add further complexity to your purchase, as you may already be limited to a specific set of lenders that are compatible with those schemes.

As a result, mortgages on new builds can work out a bit more expensive, often with higher interest rates and bigger deposits required. This will be further compounded by any other factors that may affect resale value, such as construction type and location, as well as how closely you meet the lender’s ideal eligibility criteria as a borrower.

All of the above is why you should seek professional advice before applying for your mortgage. A broker who specialises in new build mortgages can help you complete the application process faster and make sure you get the best deal available.

New build Houses versus new build flats

It’s worth bearing in mind that most lenders apply different rules depending on whether the home you wish to purchase is a house or a flat, so you’ll need to take this into account when considering any general advice on mortgages for new build properties.

New build houses

Lenders tend to offer more generous Loan to Value (LTV) ratios on houses than on flats, and this is as true for new build houses as it is for houses of other types. You can therefore usually secure a mortgage on a new build house with a smaller deposit than is typically required for a mortgage on a new build flat.

However, the LTV on a new build house will still generally be lower than that of a standard house, and most lenders will not go above 85%, which equates to a 15% minimum deposit.

New build flats

Mortgages on flats of all types tend to require higher deposits when compared with houses, and this rule of thumb applies to new builds, too.

A typical new build flat mortgage LTV comes in at around 80% or less, so you’ll need to be able to stump up at least a 20% deposit. However this may be mitigated by schemes that you may be eligible for such as Help To Buy, which is used to cover part of your deposit.

Deposit requirements

The deposit required to get a mortgage on a new build house will usually be at least 15% of the property’s value (85% LTV) and at least 20% (80% LTV) on a new build flat, unless you’re using Help to Buy. This compares with a typical minimum deposit range of around 5% to 15% on a standard residential mortgage.

All of the figures quoted could be even higher if you are perceived to be a higher-risk borrower (if you have a history of bad credit, for example) and/or if the property you are buying has any quirks that are likely to affect potential resale value above and beyond the fact of it being a new build.

Don’t forget that voluntarily putting down a higher deposit than the required minimum could save you a lot of money in the long run, as this can unlock more favourable interest rates by reducing the size of the mortgage, which in turn leads to lower monthly repayments.

If you have only have 5% deposit, see our guide to 95% LTV mortgages to find out what your options might be.

How much can I borrow?

Mortgage providers vary in their levels of generosity, with some lenders willing to offer larger mortgages than their competitors . However there are some general rules of thumb when it comes to calculating affordability for new build properties, and this can give you a useful estimate before you get into more detailed discussions with a specific provider.

A typical affordability calculation is 4.5 x your salary, so if you earn £50,000 per year, most lenders will allow you to take out a mortgage of £200,000. However, some other lenders will cap at 5 x your income which would take you to £250,000, and a few will go up to 6 x in the right circumstances, taking you to £300,000. Since lenders tend to apply stricter rules to new builds however, these larger mortgages will be harder to come by.

Eligibility criteria

You may be wondering – particularly if you’re a first-time buyer – if you as an individual will qualify for a mortgage on new build property.

To get an idea of your suitability as a borrower, you’ll need to consider several factors, but in particular:

  • How much you can afford to put down as a deposit
  • Your income (type and frequency, as well as the amount)
  • Your employment type, and how long you’ve been in this employment
  • Your credit history
  • Your age

Each lender will have its own idea of what the ‘ideal’ borrower looks like, and will assess your suitability against these criteria: they will then choose whether to make you an offer or not based on how well you come out of their assessment. This will naturally also apply to any joint borrowers who will share responsibility for paying the mortgage.

While having a clean credit record and a secure and steady income will certainly increase your appeal to any lender, they tend to differ on the finer points such as their attitudes towards self employed borrowers and what (if any) types of bad credit they are willing to accept.

Being turned down by one lender doesn’t have to mean the end of your purchase – make sure you seek an all-of-market broker to increase your chances of finding the right deal if you’re in this situation.

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Unique and ‘non-standard’ property types

Unusual properties, including eco-homes and other non-standard construction types can affect mortgage providers’ willingness to lend to you, and is likely to add further complexity when seeking to mortgage new build property. Non-standard construction shouldn’t in itself be seen as a barrier, but it will certainly mean access to fewer lenders.

Most new build homes are of standard construction, but there is a growing trend for timber frame properties, which some lenders may consider to be a turn-off.

Many new build flats are often classed as ‘high rise’ which can also put them in the non-standard category.

What is non-standard construction?

By ‘non standard construction’ we mean a home that is built from less commonly-used materials, or using methods that have been identified as presenting a higher risk for resale for a variety of reasons.

It can also apply to homes situated in a particular setting, eg. above commercial premises. You can read about this topic in more depth in our complete guide to non-standard construction mortgages.

Getting a new build mortgage with credit issues

Personal credit history is another factor that will inevitably be taken into account when a lender assesses your application for a mortgage on a new build, and the more instances of bad credit you have on your file and the more serious they are in nature, the harder it can be to find a willing lender.

Every lender is different in terms of what they will and won’t accept, so while some won’t consider applicants with anything but a spotless record, others will accept even recent and severe credit issues in the right circumstances.

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Reassignment of sale contracts

Some new build properties are not purchased from builders or developers, but third parties who have not yet completed the transaction. This might occur if a third party has bought the property off-plan, exchanged contracts but not yet finalised the purchase.

If they were to then sell the contract onto a new buyer – sometimes at a premium, but not always –  this would be classed as a reassignment of contract/lease or a sub-sale purchase.

Only a handful of lenders are happy to approve these transactions, and some of them apply extra criteria the deal will need to meet.

This criteria includes…

  • The valuer instructed by the bank must be made aware of the nature of the transaction
  • The LTV must be below 70% of the lower purchase price or valuation
  • The total mortgage lending must be less than the contracted sale price being paid by the third party
  • All deposit funds must be evidenced as being from the applicant’s own resources
  • No family or other relationship between any applicant and the vendor or third party

Due to the niche nature of reassignment of contract purchases and the lack of lenders who approve them, speaking to a mortgage broker who specialises in new build mortgages is recommended before going ahead with one. They can offer you bespoke advice on how to get the best deal and will have you back throughout the transaction.

Get matched with a broker who specialises in new build mortgages

If you’re in the market for a mortgage on a new build and would like to speak to an expert for the right advice, don’t hesitate to get in touch with us by calling 0808 189 2301 or making an enquiry online with a brief outline of your requirements and circumstances.

We offer a free broker-matching service that will take your needs and circumstances into account to pair you with the mortgage advisor who’s best placed to help you get the finance you need. In this case, you will be matched with a broker we’ve handpicked for you because of their track record arranging new build mortgages for customers like you.

Speaking to a broker who specialises in new build mortgages before you apply could help you save time and money in the long run. Your first consultation with your broker will be free with no obligation to process and it won’t leave any marks on your credit report.


Can I get a new build mortgage after retirement?

New builds can make great retirement properties as they are generally easier to maintain than older properties. If you’re keen to take out a mortgage on a shiny new home later in life then this should certainly be possible with the right type of product, such as a Retirement Interest Only mortgage. Speak to an expert if you need advice on how to finance a property purchase after retirement.

Can I get a mortgage for new build buy-to-let property?

It can be difficult to take out a buy to let (BTL) mortgage on a new build, and many lenders won’t allow BTL unless a property has been inhabited for at least six months. This is because new builds have historically been exploited in property scams, and recent housing legislation makes it harder to purchase new property for profit.

It’s also harder for lenders to establish facts relevant to your application, such as the amount of rental income you can expect as well as resale value on a brand new home. So if you do find a lender that is willing to offer BTL on a new build you can expect to pay hefty interest rates as well as a large deposit. We recommend you speak to an expert for advice, and if you want to find out more about buy to let mortgages head over to our article dedicated to buy to let mortgages.

Can I get a new build mortgage in Scotland?

Yes, you can certainly take out a mortgage on new build property in Scotland under the right circumstances. New build mortgages in Scotland follow the same general principles as they do elsewhere in the UK, i.e. the criteria may be stricter and rates and minimum deposits a little higher, but they are available provided you meet the lender’s requirements.

Can I get a new build mortgage in Northern Ireland?

It should absolutely be possible to take out a new build mortgage in Northern Ireland provided you meet lenders’ criteria. These mortgages are offered on much the same basis as they are elsewhere in the UK, so the advice given throughout this article should apply – however it is worth speaking to a Northern Ireland specific mortgage broker to ensure access to the best deals.

How can I get the best rates on a new build remortgage?

Are you the current owner of a new build looking to secure a new mortgage deal before your lender’s SVR kicks in? Many customers ask us ‘can I remortgage a new build property?’ and the answer is usually yes, provided your circumstances haven’t changed in such a way as to affect your eligibility to apply for a new mortgage.

Once you’ve been living in your home for a number of years, the property will no longer be considered a ‘new build’ so you should be able to access a wider range of standard mortgage products, which are likely to have lower interest rates that you can fix for up to 5 years: speak to an all-of-market broker to ensure you get the best deal.

Can I buy a new build as a second home?

It should certainly be possible to take out a mortgage on a new build as a second home in the right circumstances, as long as you don’t intend to immediately rent it out and are buying it for personal use, as this would place it in the ‘buy to let’ category.

Second homes require larger deposits and tend to have higher rates because the lender needs to consider your existing mortgage debt, but you may also have more financing options as a current homeowner. Take a look at our guide to mortgages for second homes here to get a flavour of the type of products that are available.

Can I port my existing mortgage to a new build property?

Porting a mortgage to a new build is possible, but you would need the lender to approve the transaction. To see if this is possible, you’ll need the right advice. Talk to one of the new build mortgage experts we work with today.

Where can I find a new build mortgage calculator?

To get a ballpark figure for the cost of repayments on your new build mortgage, you could try using our mortgage calculator which can be found here. You’ll need to have a good idea of your expected deposit amount, interest rate and the amount you intend to borrow in order to use this tool.

Please note, we don’t currently have dedicated help to buy new build mortgage calculator as this is a fairly specific set of circumstances, and requires a more nuanced view than a calculator can provide. Always speak to an expert for the most accurate illustration.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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