Mortgages on New Build Homes

For many home seekers looking for a new place to live, being able to purchase and move into a new build property is the ideal situation. Purchasing a newly built property has many benefits; they tend to be energy efficient, build to a high standard, and buyers do not have to worry about the dreaded buying chain that could fall through at any time. 

But what about mortgages with new build homes? Are there any key differences between obtaining a mortgage for a new build and gaining a mortgage for an existing home? This is what we are discussing in today’s blog.

Mortgage Criteria

When it comes to buying a new home, you may find that mortgage brokers have to work with stricter criteria from the mortgage lenders. This is because mortgages for new builds are commonly seen as riskier, just in case the home decreases in value. 

If the value of the new home increases then this is great news for the buyer. This means that you will have more equity in the property, as the portion of the property’s value accounted for by the mortgage will decrease.

Deposits

One thing buyers should be aware of is that mortgage brokers will often ask for a slightly higher deposit when discussing new build homes. This is usually because lenders set a lower maximum loan to value (LTV) on new build mortgages.

An LTV is the amount a buyer can borrow on the mortgage compared to the overall value of the property. This means that a mortgage broker could potentially offer a maximum LTV of 75 per cent. If this is the case, the buyer would need to supply a deposit of 25 per cent of the property’s cost. 

Help to Buy

With the assistance of the government-backed Help to Buy scheme, new home buyers are able to apply for a mortgage with just a 5 per cent deposit. This makes it a lot easier for new buyers to obtain a mortgage without needing to provide a large deposit. 

Under the scheme, the government will provide new buyers with an equity loan worth 20 per cent of the property’s value (or 40 per cent if the property is located in London), which remains interest-free for the first five years.

Contact Robin Mortgage Design

If you are located in Milton Keynes or the surrounding area and are looking for reliable, friendly and customer-focused mortgage brokers, then Robin Mortgage Design is who you need.

If you would like to get in contact with a member of our team to answer any mortgage-related questions you may have, please feel free to get in touch with us by filling out our online contact form or by giving us a call on 0333 242 386.

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Now it’s time for the legal bit: YOUR HOME BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE PAYMENTS

Robin Mortgage may charge a fee for arranging your mortgage, a typical fee would be £395.00 but could be up to £1,495.00 depending on your circumstances.

The information in this blog is only valid for the date it is written.