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LTV rates for new build mortgages

How do I get the best LTV ratios on a new build mortgage? Find out here.

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 25, 2021

LTV rates on new build mortgages

Purchasing a new build property can appeal to many buyers as the home will be brand new and can be customised to suit individual tastes.

That being said, many people come to us for advice after discovering that some lenders are more reluctant to lend for newly built properties.

This can often result in lenders only being prepared to offer a smaller loan to value (LTV) rates, meaning a larger deposit is needed.

For the right advice on how to get a mortgage for a new build with the LTV ratio you need, it’s best to speak to an expert who understands the current market and rates.

What is a typical LTV ratio for a new build property?

Some lenders can be reluctant to lend larger amounts of money for new builds, so you may find it difficult to obtain a loan for 100% of the property value.

New buildings can be deemed as more of a risk to lenders in comparison to older buildings because there is no record of property repairs.

This can make it difficult for lenders to establish whether the property is likely to need costly repairs in the future, which could affect the homeowner’s ability to repay their mortgage.

Are there lenders who offer 90% LTV new build mortgages?

Most of the high street will consider up to 90% for new build properties (85% for flats). If you need to go with a specialist or subprime lender you may find this restricted to 80% or even lower.

Why is the LTV rate for new builds lower?

New build properties are usually built to a quality standard and therefore have better energy efficiency than older homes. Despite this, getting a mortgage for one can be more difficult than for older properties.

The value of a new build property can quickly decrease so some mortgage lenders are less willing to loan larger amounts of money for them.

This protects them against losing money in the event that the borrower defaults on their mortgage and they have to repossess. If the property sells for a lot less than they loaned for, the lender will lose money.

New build properties that haven’t been built yet

As well as this, if the new build home you wish to buy hasn’t been fully built yet, then lenders might be more reluctant to lend to you.

This is because the standard of the property cannot be fully assessed which makes it difficult for the lender to calculate how much they could resell it for in the event of repossession.

Additionally, if the property hasn’t yet been built, a surveyor cannot assess the risk of the property having faults that may need costly repairs.

Any unforeseen repairs could affect the borrower’s ability to pay their mortgage, which poses a risk to lenders. Because of this, many are reluctant to loan larger amounts for new builds and offer loan to value rates of 85%.

What can affect my LTV rate for a new build?

A lender wants to be confident that you can afford to pay your mortgage, so if you pose a risk, your LTV rate can be lower, meaning that you are offered a smaller loan.

For example, if you are on a lower income, have unsteady employment or have a lot of debt, lenders may view your mortgage application as risky, which potentially means a higher rate of interest and a larger deposit is required.

What if you have multiple issues on your application?

If you have multiple issues at once, this will often further restrict the number of mortgage lenders available, making it harder to find a mortgage which will cover the cost of the property you want to buy.

If you have any issues on your application, don’t feel disheartened and give up as it doesn’t necessarily mean that buying a new build property is impossible.

Speak to an expert for advice on what other factors can affect your LTV rate and how to get a new build mortgage with an affordable LTV.

Is it possible to get a 100% mortgage for a new build home?

In some very rare circumstances, it may be possible to get a mortgage with no deposit for a new build property. That being said, there are only a small handful of lenders who may be willing to provide a 100% mortgage.

Some of the lenders that offer 100% mortgages require security, which may involve a family member who owns their own home to be named on the mortgage too. Alternatively, they may be required to put up assets or equity of their own as collateral.

This would mean that if you fall behind on your mortgage payments, your relative would be liable and may lose their home. For more information consult our article about offset mortgages.

Can you get a 95% mortgage for a new build?

In the right circumstances, it could be possible to find a lender for a new build who is willing to loan you a new build mortgage with a 95% LTV. See our guide to 95% LTV mortgages for more information.

Is it harder to mortgage a new build flat?

Unfortunately, it can be difficult to find a lender who will provide a mortgage for a new build flat and for the lenders that will, often they only 85% of the property’s value.

This can be frustrating for buyers, especially as often there is a misconception that it will be easier to mortgage a flat rather than a house because they can be cheaper.

Even if a flat were cheaper than a house, lenders view new-build flats as more of a risk. This is because some flats can be harder to sell in the event that the lender has to repossess the property to recover the money they loaned.

New builds are notoriously more difficult to sell in general, especially if there are still available new plots on the land it is built.

Therefore, a flat that has already been lived in can appear less attractive to other buyers, making it harder for the lender to sell.

Can you find a lender for a new-build flat?

Although new build flats can be harder to mortgage, there are lenders who will consider loaning for them.

You may need to be prepared to save up a bigger deposit than if you were buying a house but the advisors we work with will take the time to search through the current rates and conditions to ensure you find the best deal.

Contact one of our team here and they can put you in touch with a specialist.

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Can you get a mortgage for a new build that is a ‘non-standard’ construction?

Many new homes are built with materials and techniques that make them ‘non-standard.’

Lenders can also be wary when it comes to loaning money for mortgages on non-standard construction builds because this too can affect the property’s saleability in the event that they have to repossess.

This is because certain property types can be expensive to maintain or repair as specialist craftsmanship and materials may be needed. This can often put future buyers off.

Are there lenders who will mortgage a non standard construction new build?

Potentially, yes, as all lenders have different criteria when it comes to non-standard construction properties.

Some may have rules that allow them to accept certain types of properties or materials whereas others may not. Many will rely solely on the valuer’s comments.

Because of the varying criteria between lenders, it’s advisable that you speak to a mortgage broker as they will know what each lender will accept or reject.

Alternatively, see our non-standard property section here.

Will I be credit checked when I apply for a new build mortgage?

Yes. Credit checks are an unavoidable part of applying for a mortgage as lenders will want to assess the risk you pose to them as a borrower.

If you have ‘bad credit’ some lenders may see you as a risk and can reject your application.

That being said, the severity and date of your ‘bad credit’ can have an impact on whether or not you are accepted or rejected by any given lender.

There are some lenders who may be happy with your ‘bad credit’ whereas others may not be so lenient.

In these cases, sometimes a larger deposit can improve the likelihood of acceptance as well as the range of lenders to choose from.

For more information on this see our bad credit mortgage section here.

Alternatively, make an enquiry and we’ll refer you to one of the experts for the right advice.

How to find lenders that offer the best LTV rates for new build mortgages

To find the best LTV rate for a new build mortgage, you should speak to a mortgage advisor.

This is because the rate you are offered can vary depending on many factors such as whether you have bad credit, are in retirement age, are a sole applicant or if you’re looking for a mortgage while self-employed.

An experienced broker will be able to assess your situation in depth and suggest lenders that can offer you the best deals.

This can help you avoid any nasty rejections on your credit file as well as make the process of finding a lender much faster.

How can a mortgage broker help you?

When seeking professional advice about your new build mortgage application, it is crucial that you speak to a broker who has real experience in negotiating mortgages for new builds.

Getting incorrect or poor advice from a broker can cost you money and can also result in your mortgage application being unnecessarily rejected.

  • Negotiate with mortgage lenders who provide 90% LTVs on new builds
  • Talk you through the pros and cons of each lender and their conditions
  • Find lenders who will potentially accept you even in instances where you may have been rejected from high-street lenders such as Natwest, Halifax and Santander
  • Source the best deals and ensure that the terms and conditions of the mortgage are affordable and suitable for you

Speak to an expert today

If you have questions about which mortgage lenders have the best LTV for new builds or just want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

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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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