How are new build mortgages different?
A new build mortgage differs mainly on timing. When you reserve the property it might not be finished for six months or more, yet your mortgage offer has to still be valid on the day you complete. Most standard offers only run for three to six months. Some lenders give you a longer validity window built specifically for new builds, and others will want to look at your application again closer to completion.
Loan-to-value limits can be tighter on a new build as well. You might reach a 95% LTV mortgage on an existing property, but some lenders cap new build lending at 85% or 90% LTV, and flats attract the most caution. In practice that can mean putting down a larger deposit than you would on a similar resale home.
Getting a valuation right is harder too. Without direct comparable sales in a brand-new development, the surveyor leans on the developer’s pricing, resale prices nearby and their own judgement. Sometimes the valuation lands below the purchase price, and that feeds straight into how much deposit you need. Our 95% LTV mortgage guide covers low-deposit lending in more detail.
Deposit requirements for new builds
For a new build house, most lenders look for a deposit of at least 10%. For a new build flat the figure is usually 15–25%, though some lenders will take less when the rest of the case is strong. Our guide to mortgage deposits explains how the size of your deposit shapes the rates you can reach. Flats sit higher up the scale because new apartment values have, in the past, dipped in the first few years after completion.
Your reservation fee, usually somewhere between £500 and £2,000, normally comes off your deposit when you complete. Check whether that fee is refundable if the mortgage falls through or if you decide to pull out of the purchase.
The new build completion process
Delays are common with new build completions. Bad weather, supply problems and labour shortages can all push the build schedule back by weeks or months, so your mortgage offer, your conveyancing and any onward chain have to leave room for that uncertainty.
Rather than a fixed date, most developers give you a target completion quarter and then narrow it down as the build moves along. Your broker should keep the mortgage offer live throughout and warn you if it looks likely to expire before you complete.
When completion day comes, you or someone acting for you usually carries out a snagging inspection to flag any defects. Hiring a professional snagging company is worth the money, since they know exactly what to look for and will produce a formal report for the developer to work through.
New build warranties and lender requirements
Almost every lender expects the property to carry a new build warranty from an approved provider such as NHBC, Premier Guarantee, LABC or Zurich. That warranty usually covers structural defects for ten years, which reassures the lender about the state of the home over the long term.
Without an approved warranty in place, your choice of lender shrinks a great deal. If your developer uses a less familiar warranty provider, raise it with your broker early so you can confirm the lenders you have in mind will accept it.