arrowright roundtick plus plus house 66 . 7 % cornercurve

Don't let a mortgage get in the way...

New build mortgage offers

Can you negotiate for a better deal for a new build property mortgage and how long do you have to respond to a lender’s offer? Get the right advice on these subjects here.

Get Started
continue to article

By Pete Mugleston   Mortgage Advisor

Last updated: 2nd April 2019 *

A newly built property can be appealing to many, but it can mean that as the buyer you'll be paying a premium for your home compared to similar resale properties.

Because of the higher asking prices that come with new builds, it can be a good idea to negotiate and reach an agreement with the developer for an offer.

This can be daunting if you have never had to negotiate before, especially if you are a first time buyer or someone who might not know the current rates and prices of the market.

We also hear from loads of customers who have received a mortgage offer from a lender for a mortgage on a new build property and are wondering how long they have to respond.

To help you understand more about how to get the best offer on a new build and how long lender offers are valid for, we have created this article which includes the following topics:

For immediate advice on how you can get the best offer for a new build, it’s best to speak to an expert who can negotiate for you. Contact a specialist here.

Don't let a mortgage get in the way

We’ll find you a qualified and regulated mortgage expert who specialises in cases like yours

  • We've helped over 75,000 get the right advice
  • Our form only takes a minute, then let us do the hard work

How long does a mortgage offer last on a new build?

With the help of a mortgage broker, you could be able to negotiate a new build mortgage offer that is affordable and has terms and conditions that work for you.

When most lenders agree to a mortgage in principle, the offer they give  you will have a new build mortgage offer expiry date between three to six months. This can vary between lenders so it is vital that you confirm how long you have to decide and proceed.

The amount of time the lender agrees to hold the offer, is the time you have to complete any documents.

This can be stressful without the help of a mortgage broker as it may require you to chase up your solicitor, lender and developer to ensure that they have signed and completed all of the necessary documents needed for you to complete your mortgage.

Can you get an extension on your mortgage offer for a new build?

We hear from many customers who are approaching a new build mortgage offer expiry date and are wondering whether the lender would be willing to grant them an extension. Some might be, but only under certain circumstances.

If you're nearing to completing the purchase of a new build but for whatever reason, you are held back, you should speak to your mortgage lender as soon as possible.

The process of a mortgage can be difficult and often because of things out of your control, things can get delayed.

Most lenders will be understanding of this but may require evidence as to why there is a delay. Some lenders may also reassess your mortgage offer as well as your credit history and affordability to determine whether they will extend your new build mortgage offer. They may also require another valuation, which you may be asked to pay for.

Can you negotiate for a better offer for a new build?

Buying a new build home can be exciting and many buyers enjoy the prospect of moving into a ready made, decorated home. Despite this, some might feel nervous about asking for a discount or an incentive.

But should you pay the asking price, or is there room for negotiation when buying a new build?

Before you agree to the asking price, asking whether there are any incentives or buying off plan discounts can pay dividends, as most developers will consider factoring in discounts into their budget.

Read our top tips below on how to negotiate offers on new builds.

How to negotiate the best discounts for a new build

Look at the developer’s competitors

See what other deals are available on the market. Use the competition to your advantage and take note of what others are offering. Check how long their new build offer is valid for and then go to your choice of developer and tell them what other house-builders can offer you and ask them to match it or make you a more favourable offer.

Find out when the developer’s end of financial year is

They may be more willing to provide discounts in order to increase their end of year profit

Negotiate when there are only a few properties left

This can be a great time to save money and ask for a ‘buying off plan discount.’ This is because once a developer has sold the majority of their properties and has broken even, any money they make thereafter is profit. This can make the developer more relaxed about giving discounts.

How to negotiate the best extras for a new build

Extras can be easier to negotiate for as opposed to a discount on the price as developers don't want to annoy other buyers by selling an equivalent home for less than they paid for theirs. But what can you negotiate for?

Ask for insurance

Some insurance companies are reluctant to insure new builds so negotiating buildings insurance into your offer could be very beneficial

Ask for a kitchen or bathroom upgrade

Kitchen and bathroom upgrades are most commonly offered as for many new buyers, having these already installed and decorated can save a lot of time. Developers will use a wholesaler in order to buy a range of kitchen and bathroom designs at a lower cost and will then upsell these as an ‘add on’ to new buyers.

Is the incentive valuable to you?

If you’re offered what you think is £3,000 worth of incentives - think about whether you actually need them and if you would prefer an incentive of a different kind.

For example a £3,000 new bathroom is only a good incentive if would have paid that anyway. Whereas an incentive of “free stamp duty” could be of more value to you as this is a cost you would have to pay (unless you are a first time buyer.)

If the original new build offer comes with extras such as free appliances, the developer would have included those into the price already. Therefore, if you do not need the appliances and would rather have money off or another incentive, then ask.

Get the help of a mortgage broker

The advisors we work with have extensive experience with mortgages for new builds and therefore know which developers offer the best incentives.

As well as this, they can also negotiate better incentives for you to make sure that what you’re being offered is the best deal available.

Contact an advisor here for more information on negotiating offers for new builds.

Can you negotiate a lower deposit?

Unfortunately, the majority of lenders may ask for a larger deposit for new build mortgages as newly built properties can be riskier loans.

This is because it is hard to predict whether a new building will need repairs or expensive maintenance, especially if the materials used aren’t conventional i.e. fiberglass.

Unexpected repairs in the future can be a problem for homeowners as by paying for those, they could end up behind on their mortgage  - which essentially leaves the lender out of pocket.

As well as this, lenders also have to consider that the value of the new build property can decrease over time.

This, as well as some lender’s strict criteria, makes it very difficult to negotiate a lower deposit.

Can you negotiate a lower asking price to pay a lower deposit?

You may be able to negotiate a lower asking price from the developer. A lower asking price could mean that you pay a lower deposit.

For example, if the asking price for a home was £200,000 and your lender requires a 20% deposit, you would need a £40,000 deposit.

If you or your mortgage broker is able to negotiate a lower asking price of £180,000, your 20% deposit would be £36,000.

Could a lower asking price make it easier to find a mortgage?

As well as this, a lower asking price could make it easier for you to find a lender for your new build mortgage as the lower the asking price, the lower the loan from the lender.

Often lenders will undervalue a new build property meaning that they will only be prepared to loan you a percentage of the asking price. This can leave many homeowners needing to find extra finance to get the money needed for the full asking price.

However, if you are able to negotiate a lower price from the developer, it could decrease the likelihood that a lender will undervalue the property, meaning that you may be able to finance more of a percentage of the home.

How can a mortgage broker help you get a better new build offer?

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

  • Talk you through the pros and cons of each developer and their incentives or offers
  • Research the new build market and negotiate better incentives for you based on competitor offers and other schemes
  • Negotiate with mortgage lenders to find an affordable deal
  • Handle paperwork and chase up other parties to meet the mortgage offer deadline
  • Negotiate with lenders to extend your mortgage offer for a new build if needed
  • Find new build mortgage offers from lenders who will potentially accept you even in instances where you may have been rejected from other lenders such as Halifax and Nationwide
  • Source the best deals and ensure that the terms and conditions of the mortgage are affordable and suitable for you

How much could you borrow for a new build mortgage?

Most lenders will be prepared to lend 85% of a new builds market value although this will vary heavily.

For example, if a lender offers a LTV (loan to value rate) of 85%, this would mean that they are prepared to loan you 85% of the property’s market value.

So if the property is worth £200,000, they will lend you £170,000. You would then need a deposit of 15% which would be £30,000.

It may also be possible to get a new build mortgage with a deposit of just 5% if you use a government scheme such as Help to Buy.

What can affect my deposit size for a new build?

The amount of money you will be asked to put forward as a deposit will be affected by many factors, so it is important that you seek professional help from a mortgage broker.

These can include:

  • Credit history
  • Age
  • Property type
  • Choice of lender
  • Whether you use a government scheme such as Help to Buy

Every lender is different and some will require higher or lower deposits based on their own criteria and appetite to lend to someone in your circumstances.

For example, some lenders have rules about certain types of properties or materials that require them to ask for a larger deposit whereas there may be other specialist lenders who have no issue with lending for properties that are non-standard.

You can read more about how non-standard properties can affect your deposit size here.

Speak to a broker to calculate your deposit size

It is only after speaking to a broker who can through your finances with you and search the market for the best lenders, that you will be able to get a more accurate idea about how much deposit you will need.

For more information, speak to an advisor here.

Is there anything to be wary of when purchasing a new build?

With all the incentives and beautiful looking new homes available with upgraded carpets and kitchens etc. some folks may ask the question “that all sounds wonderful, but what’s the catch?” because we’re often told, if something seems too good to be true, it probably is.

Many new build developments have been found to be built on land that’s not optimum for building homes on, including (but not limited to) near to sewage plants, on old mining tunnels, on old landfill sites and near to railway or power lines. Before you settle on a property, be sure to do your due diligence and make certain that there’s no negatives to the land itself.

Most developers have an in-house mortgage advisor who buyers are sometimes pressured to use and often told they must use. It’s important that you seek independent advice, as the advisor works for the developer, who wants to sell the house for as much as possible to make the most profit. Think about it - If you were buying a house from another person, would you really want to tell them how much you can afford to pay for it?

The advisors we work with are truly independent and receive no incentives or suchlike from developers - therefore their only interest is getting you the best possible mortgage deal.

Speak to an expert about new build mortgages today

If you have questions about mortgage offers on a new build, how long they typically last and the incentives or money off discounts which may be available, call Online Mortgage Advisor today on 0800 304 7880 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.

Updated: 2nd April 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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 info 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.

Find out more about New Build Mortgages

New Build Mortgages