Mortgages for new build properties
Mortgages to buy newly built homes are similar to mortgages for older properties - except you need to be careful about your timing because you probably won't be moving in straightaway.
Most likely you'll be buying your home from the builder or developer and the property might not even be built yet. Usually you can look round a show home to give you an idea of what it'll look like but it could be many months before your own brand new house or flat is ready for you to occupy.
Even so, you need to have your mortgage in place right from the start because you're committed to buying the property from the day you exchange contracts. This'll likely be just 28 days after you paid a fee to the builder to reserve the property.
However long the delay before you can move in, you need to have a mortgage in place before you exchange contracts. As there's not much time to get your mortgage in place, you should start planning your mortgage even before you find a property.
Your lender needs to know that you are buying a new build because you need a mortgage that can cope with a long delay between exchange and completion. Otherwise your mortgage offer might run out before your home is ready to move in to and then you would need to apply for a mortgage all over again.
Sometimes builders start selling properties at an even earlier stage before any building work has begun. This is known as 'buying off plan' which can be risky if you commit to a mortgage for something that doesn't yet exist.
At London & Country we have a dedicated team of mortgage advisers who are trained to help people buying new build homes. They can help you decide how much you can afford to pay, make sure you comply with the builder's deadlines and tell you all about the special deals available for buying new build homes.
Help to buy schemes
The Government has several home ownership schemes for people buying new build properties and for first time buyers.
Find out about them in our Help to Buy guide or speak to one of our advisers.
Some developers and housing associations offer properties, new and old, under a shared ownership scheme where you buy a percentage, perhaps 75%, of your house and pay rent on the rest, which the housing association owns. See our Shared Ownership guide.
Benefits of buying a brand new home
- there's no one in the buying chain beyond your new home, which makes the whole process easier
- new homes are typically energy-efficient which saves money on your gas and electricity bills
- most new homes come with a warranty such as the NHBC 10-year certificate which protects you against defects in the building
- new homes can be eligible for Government schemes such as Help to Buy
- you may be able to choose your own fittings and finishes such as tiles, carpets, kitchen and bathroom
- the builder might offer incentives to encourage you to buy such as help with the cost of Stamp Duty, paying your solicitor's fees, help with the deposit (a gifted deposit), upgrading the fixtures and fittings - though just be aware that some lenders will reduce the amount they agree to lend you in this situation.
The new-build buying process
- Step 1 - Speak to a mortgage broker. They'll help you work out how much you can afford to borrow and what it'll cost. They will also check if you're eligible for any home-buying schemes.
- Step 2 - Start house-hunting.
- Step 3 - When you have found your home, negotiate the price and incentives with the builder. It is worth checking again with your mortgage broker to be sure you can afford the final price you agree.
- Step 4 - Now you're ready to go ahead and pay a reservation fee to the builder. Take the reservation form to your mortgage broker and they will start looking for the best mortgage deal for you.
- Step 5 - Apply for the mortgage. Do not delay because the 28-day deadline starts on the day you pay the reservation fee. Supply any documents the lender requests such as proof of income and proof of identity.
- Step 6 - Instruct a solicitor. At London & Country we can help you find one if necessary.
- Step 7 - The lender will issue a mortgage offer once it's carried out a survey and approved your application. At last you're ready to exchange, pay a deposit and set a completion date which will probably be when the building is finally finished.
For help finding the right mortgage for your new build home, speak to one of our expert advisers on 0800 923 2055. Our service costs you nothing, its fee free.
We can also help if you're a first time buyer and you can find more information with our First time buyer guides.