New Build Mortgages

New Build Mortgages Explained

Getting a mortgage for a new-build home can sometimes be harder than for an older property, as some lenders put stricter limits on the maximum value of a property on which they’ll offer a loan.  This means you may be restricted to borrowing a lower loan to value (LTV) percentage.

Mortgage type - new build mortgages

Timing can also be an issue. Mortgage offers tend to be valid for six months, which can cause a problem if you’re buying a home that hasn’t been built yet and the projected completion date is further in the future. Some lenders will consider extending their offers, but this is often subject to reassessing your application. 

We can help you find the right mortgage for your new build home offering you the right level of flexibility for your circumstances.  New build mortgages can often be linked into government back schemes such as help-to-buy or shared mortgage schemes.

Your home may be repossessed if you do not keep up repayments on your mortgage.

What types of mortgages are there?

Fixed rate mortgages

A fixed-rate mortgage is a home loan where your interest rate is guaranteed to stay the same for a set period of time, giving you peace of mind because you know exactly how much your payments will be every month.

Variable rate mortgages: Tracker mortgages

In short, a tracker mortgage is a home loan where your interest rate will ‘track’ the Bank of England’s base rate, plus a set percentage. This can mean your payments will reduce as the interest rate reduces, but it can also mean they increase too.

The base rate is currently at a record low of just 0.1%, due to changes caused by the COVID19 pandemic. So, if the interest rate on a tracker mortgage was the base rate +1%, the amount of interest you would pay is 1.1%. If the base rate went up, the interest rate on your tracker mortgage would also rise.

Variable rate mortgages:
Discount mortgages

With a discount mortgage you pay the lender’s standard variable rate, with a fixed amount discounted. For example, if your lender’s standard variable rate was 5% and you had a 1.5% discount, you’d pay 3.5%.

Repayment mortgages

A repayment mortgage means as long as you meet all your payments every month, you will be repaying off part of your capital (the money you borrowed) and part of the interest rate. At the end of your mortgage term the property will be fully repaid and will be fully owned by yourselves.

Interest-only mortgages

Unlike a repayment mortgage, you only pay off the interest portion of your loan. This means you have to make sure that at the end of your mortgage term you have enough money saved to pay off the outstanding capital in one lump-sum in order to complete your mortgage agreement and own your home.

Schemes available to you as a first-time buyer

A Help to Buy: Equity Loan makes it possible to buy a home with only a 5% deposit, meaning first-time buyers are able to get themselves on the property ladder more easily.

With the government’s Help to Buy: Shared Ownership scheme you can buy your first home from as little as 25% or as much as 75%, and pay rent on the remaining percentage.

Try our mortgage calculator to get an idea of what you could borrow. No credit checks required.