In this guide
Not all lenders offer new build mortgages, and those that do may have stricter deposit requirements. Many require a minimum 10% to 15% deposit on a new build flat and 5% to 10% on a new build house. The reason is that new builds can lose value in the first few years after purchase, so lenders want a bigger buffer.
Mortgage offers on new builds may need longer validity because of build delays; check the offer's expiry date and any extension conditions. Not all lenders offer extended validity, so this narrows the pool of available deals.
Developers often offer incentives such as paying your stamp duty, covering legal fees, including upgrades, or contributing towards your deposit. Lenders have strict rules about these: they will typically accept incentives worth up to 5% of the purchase price, but anything above that may cause the lender to reduce the property valuation.
Important: Always disclose all incentives to your broker and solicitor. Failing to declare them can jeopardise your mortgage offer.
Most new builds come with a 10-year NHBC (or equivalent) warranty. NHBC Buildmark normally has a two-year builder warranty followed by eight years of insurance for specified damage caused by defects, subject to policy limits and exclusions. Other providers' cover varies. Lenders usually require this warranty to be in place before they will lend on a new build.
Consider paying for an independent snagging survey before or shortly after completion. This will identify any defects the builder needs to fix and is usually much cheaper than dealing with problems later down the line.
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