New build mortgages - Getting a mortgage on a new build property 

Posted 12 September 2017 by Helen Christie

Here is everything you should know about getting a mortgage on a new build, along with some tips to ease the process

There are lots of good reasons to buy a new build property, but does it make a difference when you apply for a mortgage? We’ve put together a guide to help you with everything you need to know about new build mortgages.

There are many advantages to buying a new build home. The fact that you will be the first people to live there is appealing to many, you will have a blank canvas with which to decorate, and there are guarantees that come with the new property too.

In most cases, mortgages for new builds are just the same as getting a mortgage on any other property, but there are a number of things you need to consider when purchasing a new build.

When should you apply for a mortgage?

You should start the mortgage process when you decide to buy a new home. You will be given a mortgage in principle, which is a figure that a lender will give you after taking some information from you and will tell you in ‘principle’ how much they would be able to lend you. This approval usually lasts between 60 and 90 days. This way you will be able to find out for certain how much you can afford, which could help speed up the process and put you at an advantage ahead of other prospective buyers who do not know how much they can borrow.

Mortgage offers are usually only valid for six months, which can cause problems if the property you’re buying isn’t due to be completed until after that point.

While some lenders can make mortgage offers with longer expiry dates, this is by no means standard, and many providers will make you go through a financial re-assessment before deciding whether to extend their offer.

With this in mind, it makes sense to seek guidance from a whole-of-market mortgage broker who can tell you the lenders best suited to your situation.

Government schemes and incentives

Many schemes are available on selected new build properties, such as the government-backed Help to Buy equity loan scheme, or Part Exchange.

Help to Buy is a government initiative aimed at first-time buyers looking to purchase their own home. The scheme means that buyers can put down just a 5% deposit on a property to the value up to £600,000, with the government adding incentives to both the buyer and the lender. 

Help to Buy: Equity share is available only on new build homes. The buyer puts down a 5% deposit, and the government gives an additional 20% loan towards the deposit, so the buyer only needs to secure a 75% mortgage. This loan from the government is interest-free for five years.

Help to Buy London is also available exclusively in the capital. This scheme is the same as Help to Buy, but the government will lend prospective buyers up to 40% towards their deposit, so buyers will only need to obtain a 55% mortgage.

There is also Help to Buy Scotland, which applies to new build properties from selected developers.

Some property developers will offer additional incentives to make their development stand out from others. This could be something like paying your stamp duty or your legal fees,

Part Exchange is for those who currently own a home and are looking to move, and can be an ideal solution if you are looking for a new build property. Simply put, part exchanging is trading in a home you already own in exchange for a new one. The builder of the new property buys your existing property and the value is taken away from the new property you are buying. This can be an ideal solution as it means you do not have to become part of a chain and could make the whole process much smoother, though each housebuilder will have different criteria, and you may be offered much lower than market value.

Reservation fees

New build homes will typically have a reservation fee (usually around £500) which will generally be refunded on completion.


Most developers will require you to exchange contracts and pay your deposit within 28 days of reserving a plot (and paying your reservation fee). You should make sure that your mortgage advisor and conveyancer know about any deadlines so you can ensure they are met.

If you are buying off-plan, most lenders will still be happy to give you a mortgage, but you do need to be mindful of the fact that mortgage offers typically only last for six months, so you need to be aware that if the property is not completed until after that time, you may well need to reapply again.


You are much more likely to be able to negotiate extras than negotiate the actual price of the new build property. It is worth noting that your lender will factor in any incentives, it is generally acceptable up to a certain point, but they may take it into consideration when they are assessing your application.

Lending criteria

While each lender will have a slightly different criteria depending on what sort of mortgage you are looking for and how much you are hoping to borrow, the list of things you will need is fairly similar across the board. This includes (but is not limited to) proof of income, credit score, outgoings and employment status.

Loan to value

A loan to value ratio is the ratio between the mortgage you need and the value of your property. The higher the LTV ratio, the higher the risk, and therefore the higher the interest rate is likely to be. For example, if you are putting down a £50,000 deposit on a £250,000 home, you will need to borrow £200,000. This works out as 80% loan to value ratio (with your deposit making up the remaining 20%). Typically, 80% or lower LTVs are seen as low, and anything over 90% is seen as high.


A mortgage for a self build is different to a standard mortgage that you would use to buy a house as the money is released in stages as the building progresses. Read more about self-build mortgages.


Getting a mortgage on a new build property should not be much different to securing a mortgage on an older property, and with many incentives in place, in particular the government-backed schemes, becoming a homeowner in a new build property may well be within your reach.

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