Here are some tips to help your New Build purchase and mortgage application run more smoothly. For expert advice, contact a Prospect Tree Mortgages expert today
Obtaining a Mortgage for a New Build Property: A Guide
Of course, any future planning is an opportunity for uncertainty to come knocking. We are quickly reminded that our dreams take hard work when the realities of organising mortgages, speaking to solicitors, and liaising with estate agents begin to take the shine off the excitement.
The uncertain nature of buying a property in the UK is most likely the leading cause of the stress we are all subject to when attempting such a transaction.
If buying a property is stressful, then how about buying one which isn’t even built? This article is intended to give potential buyers of New Builds a few tips and tricks to help the transaction run more smoothly.
Lenders define a new build property as one which has not been lived in before, and if you’re buying a property that matches this description, then you need to be ready to pay a higher deposit.
Most lenders cap their LTV (loan to value) at 85%, meaning that you will be required to have at least 15% to put down before you will be considered.
Correct Warranties must be in place
Look out for Service Charges
If your new build home is part of a larger development, you may find it has a service charged attached to it.
Sometimes called an Estate Charge, this charge will cover the upkeep of the communal areas in the estate. This could be anything from keeping grass verges trimmed to the regular maintenance of children’s play areas on site.
Certain lenders aren’t keen on these types of charge as often they will be ongoing and subject to change. So, exercise caution when you come across them as you will want to be sure your lender is aware that they are there.
Be wary of extras
Buying a New Build property comes with benefits. You are likely to be offered extras which could be included in the price such as dishwashers, washing machines and other white goods.
You need to be cautious that these extras are included in the asking price for the property and aren’t over and above what the developer was originally asking for.
If you have a dishwasher which is included in the asking price, then that will be fine for lending on. However, if they are offering upgrade options like floor to ceiling tiles in your bathrooms, it is likely that these will be an additional cost on top of the initial price. If this is the case, you must have the fund available to pay for these separately from your mortgage and deposit.
Many developers will offer incentives to sweeten the deal. Once again, you will need to run these incentives by your mortgage lender before you accept any of them. Incentives can skew the valuation and lead to issues with you application if not dealt with prior.
Stay in the know
We follow a fantastic account on Instagram which will help you know what to look out for when you can finally inspect your new build property.
Check out New Homes Quality Control for an entertaining, yet informative look at new build properties and some of the issues you may want to be on the look out for.
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