What Is a New-Build Property?

A new-build property refers to a home—either a house or flat—that has never been lived in. Instead of purchasing from a previous owner, buyers acquire new-build homes directly from housing developers.

Many buyers commit to purchasing off-plan, meaning the property is still under construction. One of the appealing aspects of buying off-plan is the opportunity to influence the interior design, with developers offering options for fixtures, fittings, and kitchen or bathroom layouts.

Benefits and Drawbacks of New-Build Homes

Benefits:

• Be the first to live in a pristine property that requires no immediate repairs or decoration.
• Lower maintenance costs in the initial years.
• Improved energy efficiency, leading to lower utility bills.

Drawbacks:

• Moving into an incomplete development with ongoing construction work.
• Potential snagging issues requiring resolution after moving in.
• New-build properties may not always hold their value and can sometimes be harder to mortgage.

Are New-Build Mortgages Difficult to Obtain?

Securing a mortgage for a new-build home can be challenging due to certain restrictions imposed by lenders:

• Loan-to-Value (LTV) Limits: Many lenders cap LTV at 85%, requiring a minimum 15% deposit. Flats often face stricter LTV rules than houses.
• Mortgage Offer Duration: Most offers are valid for six months, but building delays can exceed this timeframe. Some lenders provide extended offer periods for new-build properties, making it essential to work with a knowledgeable mortgage broker.

How Much Deposit Will You Need?

Although purchasing a new-build with just a 5% deposit is possible, it demands an excellent credit score and limits lender options. A safer approach is saving 10% or more, as larger deposits can reduce monthly mortgage payments and secure better rates.

How Much Can You Borrow?

The borrowing amount depends on your income, outgoings, and lender-specific criteria. For accurate guidance, obtaining a mortgage Agreement in Principle is recommended.

Strict Criteria for New-Build Mortgages

Lenders often apply stricter criteria for new-build properties:

• Apartment buildings may have floor number limits—even flats at ground level could be affected.
• Properties above shops, bars, or restaurants may be harder to mortgage.

Schemes to Help You Buy a New-Build

Several government initiatives can assist buyers:

• Shared Ownership: Part-buy, part-rent schemes offered on some developments.
• First Homes Scheme: Discounts for first-time buyers on eligible new-build homes.

Can You Part-Exchange for a New-Build?

Some developers offer part-exchange schemes, enabling buyers to use their existing property as part payment. However, restrictions may apply, and ensuring you receive a fair price for your current home is vital.