What You Need To Know About New Build Purchases

With Help to Buy long gone and with supply and weather issues, new builds have had a bit of a tough run of it. 

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New build properties are considered slightly differently by lenders. Part of the appeal of new build properties are the brand new appliances, fresh paint, new carpets and personalised décor. 

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Once an owner has moved in, these features lose their shine. This is why new builds tend to see a small drop in value soon after their purchase. 

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Because of this, lenders see these properties as a higher risk and tend to require a higher deposit upfront. Usually a minimum of 10% deposit for a new build house (second hand houses are 5% standard) and new build flats at 15% standard. (second hand flats are standard at 10%)

This is a generalisation of course, as different lenders have different options available, Skipton for example will allow for a 5% deposit on a a new build flat and so it's always worth speaking with a broker throughout your search to check these details. 

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There are a couple of other things you'll need to keep in mind: 

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• Builder Incentives over 5% of the purchase price, this could be discounts, paid stamp duty etc can require the purchase price to be reduced by the residual amount above 5%. This will affect the level of lending available and so will affect your upfront costs. 

• New Build affordability can differ to second hand properties and offer a lower maximum affordability level, this is worth checking early on. 

• Because of the nature of building a property, the standard mortgage offer validity of 6-months may not be adequate. Many lenders offer new build specific products with a longer offer validity period, it's worth being aware of this. 

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If you do need to discuss any aspect of obtaining your own mortgage, please do always feel free to get in touch,