Mortgage options for new-build houses

There are a variety of finance options for new build houses. For instance, shared equity or ‘equity appreciation’ can be a possibility. In this instance, the developer shares the appreciation of value in the property. Other flexible options exist include extra incentives on new build homes, such as deposit paid by developer. Shared ownership with a local authority or developer may also be an option. If the property is suitable security for a mortgage, then lenders may be interested, particularly if the developers are offering discounts. However, not all lenders will accept a builder’s deposit.

With new-build it is also worth remembering completion deadlines. If your home is unfinished and looks like it may run over deadline, bear in mind that most lenders’ offers will only last for a six-month period. Some lenders offer specific loans for people looking to buy new build properties, some of which extend the mortgage offer from 6 months to twelve months.

Typically this type of specific loan can be tailored to the needs of the client, and new build exclusives such as builder incentives can be factored in.

Be careful to check the maximum loan available as many lenders have lowered these substantially in the last 18 months – eg some lenders will only lend up to 65% on a new build flat, 75% on a new build house.  Each lender has different criteria, and they will also base their lending on the mortgage valuation given by their surveyor, not necessarily the figure you are purchasing at.  Each lender views incentives differently so a 5% deposit being paid by the developer, could affect the valuation a surveyor places on the property.  It is advisable to speak with a ‘whole of market’ mortgage broker before proceeding.