What is a new-build mortgage?
A new-build mortgage helps you buy a newly built house or flat. You can arrange one for a completed home or an off-plan purchase, where you agree to buy before building work has finished.
Some lenders may also class recently converted or substantially renovated properties as new-builds, so the definition can vary.
Four things to know before reserving
DEPOSIT
Check your deposit
Some lenders ask for a larger deposit on new-build flats than houses, so check what you may need before reserving.
TIMING
Match the mortgage timetable
Build dates can move. Make sure your mortgage offer is likely to last until completion or can be extended if needed.
INCENTIVES
Declare every developer incentive
Tell your adviser about deposit contributions, cashback, paid fees or extras included with the property.
PROPERTY
Confirm the property warranty
Check that the new-build warranty meets your lender’s requirements before you commit to the purchase.
Are new-build mortgages different?
New-build mortgages work much like other residential mortgages. However, lenders can have different requirements for deposits, developer incentives and how long your mortgage offer remains valid.
How much deposit will you need?
Some buyers may be able to purchase a new-build house with a 5% deposit, depending on their circumstances and the lender’s requirements.
Worth knowing
New-build flats can require a larger deposit with some lenders.
For a £300,000 home, a 5% deposit would be £15,000. A 10% deposit would be £30,000, while 15% would be £45,000.
How much could you borrow?
Use our affordability calculator for a quick estimate.
BUYING SUPPORT
Developer incentives
A developer incentive is something offered by the housebuilder to encourage you to buy one of their homes. It might reduce your upfront costs or add value through extras included with the property.
Common incentives can include:
- Deposit contributions towards the amount you need to provide.
- Stamp Duty or legal fee contributions to help with buying costs.
- Cashback or mortgage contributions paid as part of the purchase.
- Flooring, appliances or kitchen upgrades included with the home.
- Fixtures and finishes such as turf, bathroom upgrades or EV charging points.
Incentives can vary between developments, individual plots and different stages of the build.
Learn more about new-build incentives
Tell your adviser about every incentive
Tell your mortgage adviser about everything included with the purchase, even if it isn’t a cash payment. Lenders need to understand the full purchase package when assessing the property and your mortgage application.
Declaring incentives from the beginning can help avoid delays later.
THE UPSIDE
Benefits of buying a new-build
Energy efficiency
Modern construction can reduce the energy needed to heat your home.
No onward chain
Buying directly from a developer means there is no seller waiting to purchase another property.
Green mortgage options
Some lenders offer specific mortgage products or incentives for energy-efficient homes, subject to their criteria.
KEEP IN MIND
New-build considerations
Property valuation
Your lender will value the home as part of the mortgage process. If the valuation is lower than the agreed price, you may need a larger deposit or to review the purchase.
Snagging
A new home can still have defects or unfinished work. Check how the developer will put these right.
Service and estate charges
Check what any ongoing charges cover and how they could change before you commit.
How to get a new-build mortgage
01
Speak with a mortgage adviser
Send us a few details and an adviser will contact you to discuss your plans and an Agreement in Principle (AIP), which gives an initial indication of how much you may be able to borrow.
02
Choose your home and apply
Once you’ve chosen a home, we’ll check the property, deposit, developer incentives and build timetable before guiding you through the mortgage application.
03
Plan for completion
New-build completion dates can move, so keep an eye on when your mortgage offer expires. If the build is delayed, speak to your adviser early about what happens next.
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 mortgage questions answered
How long does a new-build mortgage offer last?
It depends on the lender. Because build dates can change, check when your offer expires and speak to your adviser if completion is likely to fall outside it.
Does a new-build need a warranty for a mortgage?
Lenders can have requirements around the warranties they accept on new-build properties. Check what cover comes with the home and whether it meets your lender’s criteria before you commit.
Can I get a mortgage on an off-plan property?
Yes, although the build timetable matters. If completion is some way off, check how long your mortgage offer will remain valid and what will happen if the build is delayed.
Can developer incentives affect my mortgage?
Yes. Lenders can limit the types or value of incentives they accept, so tell your adviser about any deposit contribution, cashback, paid fees or extras before applying.
Can first-time buyers get a new-build mortgage?
Yes. First-time buyers can purchase new-build homes, subject to the usual affordability and lender criteria. Some may also be able to buy with a smaller deposit, depending on the lender and the property.
