Posted in: Buying Guide, 15th June, 2020

Buying Guide: New Build Mortgages

When purchasing a new build home for the first time, we often find that people feel a little daunted, or believe there is a different process to mortgaging a home.

They couldn’t be more wrong. The process is very much the same.

As with any home purchase, as a buyer, it is recommended that you source multiple offers from different lenders. This allows you to get the best deal for your situation.

Mortgage brokers often have access to deals you won’t find on comparison websites - they are usually well equipped and knowledgeable on the process of purchasing a new build too.

So, what is the new build buying process?

There are often two ways you can purchase a new build. Either as a property (meaning it is fully built) or off-plan (before its built). The latter will mean you’ll need to obtain a mortgage in principle, which gives you six months to move into your property before you’ll need to resubmit your financial details for a new mortgage offer.

A mortgage in principle (for a new build or otherwise) is essentially a figure which outlines the sum your lender will be willing to give to you, and proves this to your developer so you can go ahead with your home reservation.

Buying off plan has its benefits - not only are you securing your preferred plot early, sometimes your house may have gone up in value before you’ve even moved in!

Purchasing a complete home is a much quicker process, because the property is more or less ready for you to move in. With this, the process is as simple as purchasing an older home and you could also be moving in within 28 days of your reservation!

What are the benefits of mortgages for new build homes?

When it comes to obtaining a home buyer’s survey on an older home, you can sometimes encounter unexpected bumps in the road, which then delay the mortgage and rest of the home buying process.

For example, your lender may say they will not lend you the funds originally agreed - this could be down to issues with the building you are purchasing. These could be things such as essential roofing works, damp or other structural issues, which can all decrease the value of your house and make your lender apprehensive about lending you the original monies agreed.

Another common issue, particularly if you are purchasing a home in a sought after area, is homes going to ‘best and final bids’ leading to a bidding war with other individuals who wish to purchase the home you have your heart set on. This puts the seller in a great position and means your best laid plans are disrupted.

A cash buyer, or someone with a larger deposit may be in a better position to move forward with the property purchase. This is quite a common occurrence and means you can sometimes miss out on the home you’d already moved into in your head.

With a new build home, all of this stress is non-existent.

The home you purchase has never been lived in, it hasn’t endured decades of UK weather, nor has it endured any structural damage. It is very rare that a lender decides not to follow through with the original agreement once a surveyor has attended a new build property.

The benefits to a new build mortgage, essentially, is that the mortgage amount offered based on the valuation of your property is likely to be agreed by your surveyor. This means you’ve got the all clear to go ahead and purchase the stunning new build you’ve been dreaming of.

Benefits of new builds for first time buyers

The benefits to purchasing a new build home don’t stop at the fact that you’ve chosen the kitchen units, the flooring or the plot you want to live in.

If you’re a first time buyer, then you’re in an even better position to purchase a new build home. Since 2013, the government has offered to lend 20% of your new build’s valuation in an interest free loan.

There is no interest to pay on your loan for the first five years, and you only need a 5% deposit to bag your very first home. This means you could have secured one of our sold out homes in Heywood with a deposit of just over £6,500!

The government scheme aims to get more people on the property ladder in a more affordable way. We have seen great success from it, as have our customers.

If you’d like to know more about our latest projects, take a look at our newest homes or get in touch.