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Mortgages for New Builds with Prospect Tree Mortgages

Mortgages for New Builds

Due to the demands from developers with deadlines and specific requests, buying a new build is different from purchasing other types of properties. Prospect Tree Mortgages are here to help and guide you through the process of purchasing a new build property and applying for a suitable mortgage to go with it.

What is a new-build property?

New builds are properties that are brand new and have never been lived in.

You may find properties which are almost new-builds, and are described as such by the estate agents. However, this article is focused only on houses and flats which have never been owed or occupied before.

Why buy a new build property?

There are many advantages to buying a new build property, but also some things you should be aware of before approaching a developer.

Fixtures and Fittings

Fixtures and fittings are often included as standard with new-build properties. Each developer is different and will include different items as standard. But you may get washing machines and dishwashers included and sometimes hard flooring and carpets.


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Often you will find that developers try to upsell additional items which aren’t included so you should exercise caution here as you may be able to get them cheaper elsewhere. Also, extras aren’t usually additions which you can add to your mortgage, so you should discuss this with your mortgage advisor before agreeing to anything.

Up-to-date with building regulations

As technology advances and we learn more about designing and building energy-efficient and safe properties, building regulations change with it.

Buying a new build property will likely mean that your property is fully up to scratch with the latest building regulations which developers have to adhere to.

Energy Efficiency

By having a property which is up-to-date with the latest building regulations, you’ll find that it runs more energy efficiently. This will help you save money on your energy bills, an issue which many homeowners are concerned about at the moment.

Mortgages for New Builds

Property developers work to demanding deadlines and once you’ve paid your deposit you will usually be expected to exchange within 28 days.

This can present a challenge as many lenders may struggle to complete your mortgage application within that time frame. The best way to get around this is to start the mortgage process as soon as possible.

Larger deposits

You will find that mortgage lenders have stricter criteria for new build properties. One key difference is that they will require you to pay a higher deposit.

Deposits for New Builds are higher, ranging from 15-25% depending on what property you are buying and which lender you are using. However, there are Government scheme which can help.

What Government-backed schemes are available?

Help to Buy: Equity Loan

This scheme allows you to become the full owner of a property but the government will hold a share of up to 20% (40% in London), until you repay the equity loan.

This scheme helps people to buy a new-build property with a smaller deposit than usually required.

This scheme was launched in April 2021 and is for first time buyers exclusively. The scheme includes regional property price limits to ensure it reaches the people who need it the most. Initially the scheme is set to expire in March 2023.

In order to apply for this scheme you must:

  • be aged 18 or older
  • be a First-time Buyer

You cannot:

  • own a home or land anywhere in the world, now or in the past
  • have had any form of sharia mortgage finance
  • own a home bought with other people or inherited
  • be married or in a co-habiting relationship, either now or on legal completion with anyone who owns or has owned a home or land anywhere in the world
  • buy a second home

First Homes

First Homes is a brand new scheme which is aimed to help local First-time Buyers and Key Workers get on to the housing ladder.

This is achieved by offering homes at a discounts of 30% against their current market value and in certain areas 50%.

The discount is designed to be applied to the homes forever and is passed onto the new buyers when you sell your property.

In order to apply for the scheme:

  • be a first-time buyer and have a household income not exceeding £80,000 or £90,000 in London. This amount can be lower if set by the local authority.
  • post-discount price cap on first sale of property of £250,000 across England and £420,000 in London. This can be lower if decided by the local authority.
  • it should be a buyers only home and a purchaser needs to use a mortgage for at least 50% of the purchase price.
  • the buyer must have local connections or have a key worker status

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What properties cans be bought with this scheme?

In time, more ‘First Home’ properties will become available throughout the UK. Initially 1,500 First Homes are being rolled out over the next two years across 100 locations in England.

First homes will gradually become more available as developers and local authorities begin to incorporate the new planning policies.

What types of new-build mortgages are available?

The main two types of mortgage are fixed-rate products and variable-rate products. Each of them have their advantages and disadvantages.

Fixed- Rate mortgages

Fixed rate mortgages are the most common type of mortgage. Most people choose fixed rates because they would prefer stability of payments and like to understand precisely how much they must budget for each month.

Fixed-rate mortgages usually carry an early repayment charge (ERC) as a caveat. This means that you will be charged a pre-agreed percentage of your loan if you want to redeem the mortgage early. If you remortgage to a new lender, this also counts as an early redemption.

Variable- Rate mortgages

There are different types of variable rate mortgage available. Most variable rate mortgages will be tied to another rate which they track. In most cases this is the Bank Rate (commonly known as the base rate).

Lenders will either offer a rate which tracks the base rate or a ‘discounted variable’ which will offer a set discount on their variable rate but still track it.


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Discounted variables will often carry an ERC like fixed-rate mortgages, whereas standard variables often come without.

Whichever variable-rate you choose, your monthly mortgage repayments will be subject to variation depending on what interest rates are doing. Due to this, some lenders will offer a lower loan amount on these products to safeguard against a sudden increase in interest rates.

You may choose a variable rate if you want to benefit from a reduction in interest rates, but if you do, you should be fully aware of the risks.

Prospect Tree Mortgages for New Builds

When it comes to buying a new-build you need a mortgage advisor who fully understands the process and the schemes associated with it.

Your broker will need to act quickly and efficiently, but also with diligence to ensure that nothing is missed.

Prospect Tree Mortgages experts have over 25 years experience in helping people with their mortgages. We put customer service at the heart of everything we do, so you will be kept informed throughout the process.

Matt and Fred at Prospect Tree Mortgages made the whole process of finding the right mortgage for us (and exploring many options to get there) stress free during the hugely stressful time of buying a new home. I cannot recommend them highly enough.

L Atlee

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