What are new build incentives?
New-build incentives are benefits offered by a developer alongside the property to encourage you to buy. Some reduce your upfront costs, such as a new-build deposit contribution, cashback or help with legal fees, while others add value through flooring, appliances or upgrades.
Because these incentives form part of the overall purchase package, lenders may take them into account when assessing the property and new-build mortgage.
Types of new-build incentives
Developers can offer a range of incentives, from help with upfront costs to upgrades included with the property.
New-build deposit contributions
A new-build deposit contribution is where the developer pays towards the deposit needed to buy the property, reducing the amount you need to provide yourself.
For example, on a £300,000 home, a 5% contribution would be £15,000. You would still need to meet any remaining deposit requirement set by the lender.
The contribution does not automatically mean you can borrow more. Mortgage lenders have their own criteria around how much they will accept and how the contribution is treated, so the amount available from the developer and the amount accepted by the lender may not always be the same.
Stamp Duty and legal fee contributions
Some developers contribute towards Stamp Duty or conveyancing costs, helping reduce the amount you need to pay upfront.
The contribution may apply regardless of which solicitor you use, or it may depend on using a recommended conveyancer.
You can use our Stamp Duty calculator to estimate how much tax you may need to pay.
Cashback and mortgage contributions
A developer may offer cashback on completion or a new-build mortgage contribution towards mortgage-related costs.
For example, a £6,000 mortgage contribution could be applied in different ways depending on the developer. Check when and how the contribution will be used rather than assuming it will be paid directly to you.
Flooring, appliances and upgrades
Developers may include flooring, appliances, kitchen or bathroom upgrades, fixtures or outdoor extras as part of the purchase.
For illustration, a flooring or appliance package advertised as worth £3,000 could reduce what you need to spend after moving in. Likewise, a £5,000 upgrade package may sound valuable, but its real benefit depends on whether you would have paid for those upgrades yourself.
These extras do not reduce the property price, but they can reduce some of your costs after completion.
Do developer incentives affect a mortgage?
Yes. Developer incentives can affect how a lender assesses the purchase, particularly when they have a financial value.
Mortgage lenders will consider the purchase price, your deposit and the full incentive package. Each lender has its own criteria and requirements, so they may treat the same incentive differently.
Tell your mortgage adviser about every incentive before you apply. They can check the lender’s criteria and make sure the application reflects the full purchase package.
How much can a developer contribute to a deposit?
There is no single limit across all mortgages. How much a lender will accept can depend on its criteria, the loan-to-value and the type of incentive.
A developer may offer more than the lender will accept. Before relying on a contribution, ask your adviser to confirm how much the lender will allow and how much deposit you will need to provide yourself.
Can incentives affect the property valuation?
Yes, they can. Your lender will arrange a valuation to check that the property provides suitable security for the mortgage, and the valuer may take account of incentives included with the purchase.
This matters most where an incentive has a clear financial value, such as a deposit contribution, cashback or help with buying costs. The lender will want to understand the purchase price alongside the full incentive package rather than looking at the headline price alone.
If the lender values the property below the agreed purchase price, you may need to provide a larger deposit, reduce the amount you borrow or review the purchase altogether.
Can you negotiate new-build incentives?
Sometimes. Developers may have flexibility around the incentives they offer, particularly on certain plots or at different stages of a development.
Rather than reducing the purchase price, they may be more willing to include extras such as flooring, appliances, legal fee contributions or upgrades.
What is available can also change depending on how quickly a development is selling, the stage of the build or the individual plot. It is therefore worth asking what is currently available before agreeing to the purchase, rather than assuming the advertised package is the only option.
How Muttuo can help
As a new-build mortgage broker, we compare options from 100+ lenders across the market.
Check deposits, incentives and build dates
Compare suitable new build mortgage rates and fees
Guide your mortgage application
Plan your new-build purchase
Discuss your property and budget with an adviser.
Your lender may repossess your home if you do not keep up with your mortgage repayments.
Your new-build incentive questions answered
Are new-build incentives free?
They are included as part of the overall purchase package, but that does not necessarily mean they have no impact on the mortgage. Lenders may take their value into account when assessing the purchase.
Do I need to declare non-cash incentives?
Yes. Flooring, upgrades, appliances and other extras should still be disclosed alongside financial incentives so the lender has the full picture.
Can a developer pay my whole deposit?
It depends on the lender’s criteria and the contribution being offered. There is no single rule that applies across every mortgage.
Are new-build incentives available on every property?
No. Incentives can vary between developers, developments and individual plots, and what is available can change over time.
