How are new build mortgages different?
The main difference is timing. When you reserve a new build, the property may not be finished for six months or more. Your mortgage offer needs to remain valid until completion, and most standard offers last only three to six months. Some lenders offer extended validity periods specifically for new builds, while others may need to reassess your application closer to completion.
Lenders may also apply stricter loan-to-value limits on new builds. While you might get a 95% LTV mortgage on an existing property, some lenders cap new build lending at 85% or 90% LTV, particularly for flats. This means you may need a larger deposit than you would for a comparable resale property.
Valuations can be more challenging too. With no direct comparable sales in a brand-new development, the surveyor relies on the developer’s pricing, nearby resales, and their professional judgement. In some cases, the valuation comes in below the purchase price, which can affect your deposit requirements.
Deposit requirements for new builds
Most lenders require a minimum 10% deposit for new build houses and 15–25% for new build flats, though some will accept less with the right circumstances. The higher deposit requirements for flats reflect the historical risk of new build apartment values falling in the years after completion.
Your reservation fee, typically between £500 and £2,000, is usually deducted from your deposit on completion. Make sure you understand whether this fee is refundable if your mortgage falls through or if you need to withdraw from the purchase.
The new build completion process
New build completions are often subject to delays. Bad weather, supply chain issues, and labour shortages can push back the build schedule by weeks or months. Your mortgage offer, conveyancing, and any related property chain need to accommodate this uncertainty.
Most developers give you a target completion quarter rather than a specific date. As the build progresses, they will narrow this down. Your broker should keep your mortgage offer live and alert you if it is at risk of expiring before completion.
On the day of completion, you or your representative will typically carry out a snagging inspection to identify any defects. It is worth hiring a professional snagging company, as they know what to look for and can create a formal report for the developer to address.
New build warranties and lender requirements
Nearly all lenders require the property to have a new build warranty from an approved provider such as NHBC, Premier Guarantee, LABC, or Zurich. This warranty typically covers structural defects for ten years and gives the lender confidence in the property’s long-term condition.
Without an approved warranty, your mortgage options will be extremely limited. If the developer is using a less common warranty provider, check with your broker early on to ensure it is accepted by the lenders you are considering.