New Build & Help to Buy

Fee Free Mortgage Advice

New Build

New build properties are becoming increasingly popular for many people, however there are a number of additional things to consider which our experts can talk you through.

Why are new build properties popular?

Put simply, you will be the first person to live in that property, with everything from the doors, to the carpets, to the drain pipes being brand new.

Warranty

New build homes typically come with a warranty such as the NHBC 10 year certificate which protects you if there are any defects in the building work, you may be able to choose your own fittings and finishes such as tiles, carpets, kitchen and bathroom which allow you to put your own stamp on the property from day one, and they are often more energy efficient which can help save on your yearly gas and electricity bills.

New Build Mortgages

Purchasing a new build property is incredibly exciting. It is a blank canvas which you can use to build on and create your perfect home and watch as the property is built literally from the ground up.

New build mortgages can come with slightly different lending criteria which our advisers will guide you through, and to help we have included a guide to our most frequently asked questions below:

Why are new build properties popular?

Put simply, you will be the first person to live in that property, with everything from the doors, to the carpets, to the drain pipes being brand new.

New build homes typically come with a warranty such as the NHBC 10 year certificate which protects you if there are any defects in the building work, you may be able to choose your own fittings and finishes such as tiles, carpets, kitchen and bathroom which allow you to put your own stamp on the property from day one, and they are often more energy efficient which can help save on your yearly gas and electricity bills. 

Is mortgage lending criteria the same?

As always this can vary depending on a number of factors, however lenders affordability calculations are often tighter than against traditional new build homes.

Many lenders also require a slightly higher level of deposit, simply because new build properties will often initially drop slightly in value (similar when driving a new car off the garage forecourt), before normally rebounding over the next few years. This protects both you and the mortgage lender.

What government schemes are currently available?

Currently the main scheme available is known as the ‘Help to Buy (HTB) Equity Loan.’ However from 1st April 2021 these are exclusively available to First Time Buyers. If you are purchasing jointly with a partner or friend you must both be classed as first time buyers, which by definition is that neither of you have ever owned a property in the UK or abroad.

The HTB equity loan enables you to borrow up to 20% (or up to 40% in London) of the purchase price of your new home directly from the government. You are then required to contribute your own deposit of 5% of the purchase price.

From April 2021, the maximum amount you can purchase a property to qualify for the HTB Equity Loan for depends on where in England you purchase.

The equity loan is interest free for the first five years, and then from year six you pay monthly interest on the loan of 1.75%. The interest rate will rise each year in April by the Consumer Price Index (CPI), plus 2%.

You are able to repay the loan in full at any point, however the amount is based on the value of the property at the time the loan is repaid. So if your property has risen in value by 10%, you will pay back the equity loan plus a further 10% of the original amount you borrowed from the government.

Are there other options to help me purchase a new build property?

Absolutely. The main other option is known as Shared Ownership.

Shared Ownership is where you purchase between 25 – 75% of the value of a property, and you then pay monthly rent directly to the Housing Association on the proportion you do not buy. This is very important to consider when figuring out your monthly budget, and mortgage lenders will also take this rental payment as a monthly commitment which can impact affordability. 

You are able to purchase an additional stake, or the remainder of the whole property, in the future (this is known as ‘staircasing’). 

The other popular option in the past was known as Shared Equity, however this is now the term often used to describe the HTB Equity Loan as outlined above. Some property developers might offer their own shared equity schemes (which work similar to HTB), however these are quite rare and the exact details would need to be checked very carefully by a solicitor. 

What else should I consider?

New build properties are often subject to strict deadlines, with the majority of builders expecting you to exchange contracts (which is where you become legally bound to purchase the property) within 28 days of paying the property reservation fee. 

Many builders will often offer a part exchange scheme for your existing home. Whilst you will be offered slightly below an estate agent valuation, you will not have estate agents fees to pay, you will avoid being in a potentially lengthy and complicated chain, and can avoid a great deal of stress on moving day. Our experts have first hand experience of doing this personally so please talk to us about this.

Our advisers are experts in new build mortgages. Call us today to discuss your requirements further.

CONTACT US