First Time Buyer New Build Mortgage

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First Time Buyer New Build Mortgage

Charlie explains the new build mortgage process for First Time Buyers.

What is a new build property?

It’s a property that has recently been constructed and hasn’t been lived in before. New build homes can come in all shapes and sizes, such as flats, terraced houses and detached houses.

Most lenders class a property as a new build if it hasn’t been already occupied. If it’s less than two years old and still owned by the developer, it can have previously been occupied by rental tenants and still be classed as a new build.

How do I get a mortgage on a new build property as a First Time Buyer?

I’ve had first-hand experience on this, as I bought a new built property as a First Time Buyer.

I would suggest you start by seeing a mortgage advisor to obtain a Decision in Principle. You then need to reserve the property. This normally costs between £500 and £1,000 and is normally deducted from the purchase price.

The process then is very similar to a standard mortgage. You’d submit an application and then it would proceed to offer and then the legal stage.

What are the requirements for getting a mortgage on a new build?

Most requirements are exactly the same, but there may be a restriction on deposit sizes. The property will also require a warranty.

How much deposit do I need for a mortgage on a new build property?

Most lenders are able to proceed with a 10% deposit, although some may need more. There’s not really any difference for First Time Buyers.

It’s just that because the property is a new build, you typically need a slightly larger deposit. The chances are you’re not going to get a 5% deposit mortgage on a new build property.

Can I use government schemes to get a mortgage on a new build?

Unfortunately, I don’t believe there are any government schemes available on new build properties at the moment. The old Help to Buy equity scheme is currently unavailable, but there is talk about bringing out a new scheme soon [podcast recorded in June 2024].

Can I get a mortgage for a self-build property as a First Time Buyer?

Yes, of course, you’re able to do self-build as a First Time Buyer. These are normally a little bit more complex than the average mortgage, though.

You would need a larger deposit and a contingency fund in the background, in case the build became more expensive than planned. But yes, you are able to get a self-build mortgage as a First Time Buyer.

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What types of new build properties can I get a mortgage for?

You can get a mortgage on all types of new properties such as flats and terraced, semi-detached and detached homes. If it’s a new build bungalow, you’d be able to get a new build mortgage on one of those types too.

How long does the mortgage application process for a new build property typically take? Any differences if you are a First Time Buyer?

I wouldn’t say there’s much difference to a normal application, apart from the valuation. When purchasing a standard building or an older house, a surveyor would complete a valuation on the property.

But when it comes to new builds, in many circumstances, the property isn’t built yet, so the valuer would have to complete a valuation based on the architect’s drawings and the wider development.

So it all depends how far along your new build is in construction. When my wife and I purchased our new build, the property had only just been released and so it took nine months to move in. But if the property is nearly ready, there is no reason why it shouldn’t take any longer than a normal property transaction.

What should I consider when choosing a new build mortgage advisor?

I think it’s important to have an advisor with experience in the field. For example, someone like myself, with experience both in purchasing one and also in arranging mortgages on new build properties.

Are there any special considerations or terms and conditions when getting a mortgage on a new build property? What are the benefits and drawbacks of new build homes?

When purchasing a new build, the property would need a warranty from the NHBC or LABC. That’s one of the special terms and conditions that applies specifically for a new build.

A benefit of buying a new build is that these homes are very energy efficient which can save on your bills. No major DIY is necessary – you get a blank canvas, and peace of mind with a 10 year warranty. There’s also no forward chain, and you become part of a new community.

One drawback is that new built homes tend to be a little bit smaller, so space and storage could be a concern. There can also be parking challenges with plot sizes being less generous than an older house, and gardens tend to be small as well.

What else do we need to know about new build mortgages?

It’s important that you speak to your broker before you start viewing properties, so you’ve got a good indication of what your budget is. It’s also worth speaking to an advisor with experience in new build mortgages.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.