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Apply for a new build mortgage with L&C

If you’re looking for a mortgage to buy a new build home, L&C is here to help. Our online mortgage finder tool can help you track down the deals you could be eligible for, and once we’ve found the best deal for you, we can help you submit your application online.

We understand that getting a new build mortgage is a big commitment, so our experts are on hand to talk you through the options available to you and support you during the application process. They have plenty of experience dealing with new build mortgages and our advice won’t cost you a penny, so get in touch today and find out what L&C can do for you.

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New Build Mortgages Explained

A new build property is usually one that has been built within the past two years and not sold during that period. If you’re buying a property which is in the process of being built, or where work hasn’t yet started on the land, it’s known as buying “off plan”.

New build homes appeal for many reasons. Not only are you often able to choose the fixtures and fittings you want, but they also usually come with a warranty to protect you against any defects in the building work. New build homes are typically more energy-efficient than older properties, too.

New build homes are generally in better condition than a similar older home, meaning you shouldn't have to fork out for repair and maintenance costs.

Another big benefit of new build homes is that, because they haven’t had a previous owner, you could avoid getting caught up in a property chain. This should make the process of buying your home much quicker, with potentially fewer delays or complications, although if you’re selling a property at the same time, you may have a chain of buyers.

However, there are drawbacks to new build properties, too. New build homes are often more expensive than comparable older properties, and if you’re looking at buying off plan, you’ll probably have to pay a reservation fee to secure your plot. If you pull out of the purchase for any reason, you could lose this fee.

And whilst you might not get caught up in a chain, if building work is delayed, you may still experience delays when it comes to buying and moving into your home.

Another drawback is that mortgage lenders can be stricter on the amount they’re willing to lend for new build mortgages. This is because the loan is seen as riskier, as the property value may fall shortly after your purchase, for no reason other than the property is no longer new. It may also be more difficult to get a mortgage for a new build house if you’re buying off plan, as there are additional risks for both you and the lender - namely, that the house build might not be completed.

If you’re considering a new home build mortgage, L&C can advise exactly which deals you’ll be eligible for and support you through the application process.

New Build Mortgage Process

The new build mortgage process is the same as for any other type of mortgage and you’ll apply in the same way. However, the timing is important, especially if you’re buying off plan. A mortgage offer from most lenders will be valid for six months and this could expire before your home is built. So check if you can get a longer validity period if your house build is facing delays. Otherwise you will have to reapply for a mortgage, with no guarantee that you’ll get the same new build mortgage rates again.

You may also be eligible for help as a first time buyer with the government-backed Help to Buy Equity Loan scheme. Launched on 1st April 2021, it replaces the previous Help to Buy scheme and offers first time buyers help with up to 20% of the cost of a new build home - or up to 40% for those buying in London. To take advantage of this scheme, you’ll have to reserve a new build property with a homebuilder that’s registered with the scheme, and apply online through a Help to Buy agent. If your application is successful, you can then apply for a new build mortgage.

If you need any support with the mortgage process for new build homes, speak to L&C for free advice.

New Build Mortgage Eligibility Criteria

In general, lenders will ask for a larger deposit for new build properties – typically at least 15% of the purchase price. Some new build mortgages may require a smaller deposit but it will depend on the property and your circumstances.

You may need an even bigger deposit if you’re looking to buy a new build Buy to Let property. This is because new build Buy to Let mortgages can be riskier for lenders, as there’s no track record to prove that rental income from the property can cover the mortgage repayments. You may need to save up to 35% of the property’s value to be eligible for a Buy to Let mortgage on a new build property.

If you’re applying for the Help to Buy scheme, there are also eligibility criteria that you’ll need to meet.

If you’re unsure whether you qualify, you can check your eligibility for a new build mortgage online at L&C.

New Build Mortgage Deals

As with any other type of mortgage, you’re likely to get the best new build mortgage rates if you can save up a bigger deposit. Lenders will also want to check your affordability for a mortgage, so they will be looking carefully at your income and outgoings. You should be prepared to supply full bank statements along with details of your income and expenditure. It’s a good idea to check your credit score, and if you have any mistakes on your file, be sure to correct these before submitting your mortgage application, as even the smallest of details can prevent you from getting the best deal.

As a specialist new build mortgage broker, L&C is here to help you find the right deal for your circumstances. Whether you’re looking to buy a residential property or a Buy to Let, we can advise you on the paperwork you’ll need and we’ll support you throughout the process - as well as scouring the market to find the best rates going.

New Build Mortgage Repayment Plan

Similar to other types of mortgages, the type of repayment plan you’re on will depend on which type of mortgage you take out. If you opt for a fixed-rate mortgage, you’ll be paying a set rate for the duration of the fixed rate term, which could be 2, 3, 5 or 10 years. This could provide some peace of mind if you’re on a budget.

Alternatively, you might have chosen a variable rate mortgage, which means that your payments will fluctuate month-on-month in line with interest rates. This could be a good way to reduce the amount you pay overall.

Finally, if you took out an interest-only mortgage you’ll only be paying off the interest on your mortgage each month, before needing to pay off the full debt at the end of your mortgage term.

Apply for a New Build Mortgage with L&C

If you’re looking for a mortgage to buy a new build home, L&C is here to help. Our online mortgage finder tool can help you to track down the deals you could be eligible for, and once we’ve found the best deal for you, we can help you to submit your application online.

We understand that taking on a new build mortgage is a big commitment, so our experts are on hand to talk you through the options available to you and support you during the application process. As a specialist new build mortgage broker, we have plenty of experience, and our advice won’t cost you a penny - so get in touch today to find out what L&C can do for you.

New build mortgage FAQs

When can I apply for a mortgage on a new build?

You’ll need to apply for a mortgage as soon as you’ve found your new build home and paid a reservation fee to the builder. Don’t hang around as there will often be a 28-day deadline from the point you pay your deposit to exchange contracts. Find out more in our Guide to new build mortgages.

How do new build mortgages work?

Mortgages for new build homes work in the same way as mortgages for older properties, except lenders may require you to put down a larger deposit. If you're buying a new build home and only have a 5% deposit, you may be eligible to use the Government’s Help to Buy scheme, which helps aspiring homeowners to get on the property ladder.

When do you start paying a mortgage on a new build?

You’ll start paying your mortgage on the new build property you’ve bought once your property purchase completes. The completion date is usually when the building is finally finished.

Is it easier to get a mortgage for a new build?

It's not necessarily harder to get a mortgage on a new build home, but you may find that interest rates are higher than on older properties. That's because new build properties are often seen as riskier by lenders, as there's no precedent to indicate whether the house value will remain stable, increase or decrease over the coming years.

How do self build mortgages work?

Self build mortgages are slightly different to new build mortgages, and are for people who want to buy land and build their own property, rather than buying a home that's already been built. This type of mortgage can be seen as risky by lenders, and most will want a deposit of at least 25% - sometimes up to 50%. The money is also usually released in stages as the building project develops.

Can you add new build extras to a mortgage?

When buying a new build property, you're often given the option of adding extras, such as flooring, fixtures and fittings. This can bring the home more in line with your personal style at a lower cost. However, it's important to be aware that these extras can't usually be rolled into your mortgage. You'll usually pay half of the cost of the extras when you order them, and the other half on completion of the house build.

You might also be interested in:

Specialist mortgage products
Mortgages for new build properties
Help to Buy scheme