First-Time Buyer New Build Mortgage
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First-Time Buyer New Build Mortgage
What are the requirements for getting a mortgage on a new build as a first-time buyer?
The requirements for a new build as a first-time buyer are the same as for any other type of buyer. There aren’t any additional restrictions for first-time buyers on this type of property.
How much deposit do I need for a mortgage on a new build property? Are there any differences for first-time buyers?
The minimum deposit for a new build property will differ from lender to lender, but usually it’s 5%. Some lenders require a 10% deposit for new build flats, as opposed to houses.
For higher loan amounts, overriding minimum deposits will kick in and apply to all properties.
A 5% deposit would only really apply for properties at the lower end of the spectrum – but there’s no difference in these minimums based on whether you’re a first-time buyer or not.
A next-time buyer would have the same minimum deposit requirement.
Some lenders do allow deposits of less than 5% specifically for first-time buyers, and you could buy any property – including a new build – with that smaller deposit. This would, of course, be subject to meeting all the lender’s other criteria.
Can I use government schemes to get a mortgage on a new build?
Yes. There are no restrictions in using a government scheme to buy a new build property, provided you meet the other criteria of the scheme.
What types of new build properties can I get a mortgage for as a first-time buyer?
A first-time buyer can potentially get a mortgage for any type of new build property, the same as any buyer, provided you meet the criteria of the lender.
What should I consider when choosing a new build mortgage advisor?
As with any type of property purchase, do consider the number of providers that the advisor has access to, as well as their fees and their experience.
Are there any special considerations or terms and conditions for a first-time buyer on a new build property?
Anyone buying a new build property needs to be aware of incentives offered by the developer selling the property.
If the value of the incentive is greater than 5% of the property value, a mortgage provider may require a larger deposit overall. They may not accept the overall value of the property because of that incentive.
Incentives often come in the form of a discount – literally a contribution towards the deposit from the vendor. You’ve got to be careful of that.
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What are the benefits and drawbacks of new build homes?
With new build homes, you’ve got to look out for the build quality, but that’s true of any property. It’s important that once the property is completed, a snagging list is done to identify anything that hasn’t been built correctly or finished off to a good standard.
How long does the mortgage application process for a new build property typically take?
The mortgage application process for a new build shouldn’t take any longer for a first-time buyer than anyone else.
It will depend on a number of factors, such as how long it takes for the valuation to be conducted and booked in with the developer, as well as the customer’s own individual circumstances. The average time is around three to five weeks to get a mortgage offer, but it can be much faster or slower.
How do I get a mortgage on a new build property as a first-time buyer?
Start by speaking to a mortgage advisor to understand how much you can borrow and whether you would qualify for a mortgage. The advisor can then arrange a Decision in Principle with a lender to give you confidence that your mortgage application is likely to be approved.
When you have an offer accepted on a property to buy, you and your advisor can complete a mortgage application for the most suitable product available at the time.
What else do we need to know about getting a first-time buyer new build mortgage?
Speaking to a mortgage advisor before you find a property is the key. We can look at your situation in a way that a Decision in Principle doesn’t quite capture – and identify possible issues that could cause an application to get declined when you make it.
The advantage is that you’ll find out about that now, before you find the all-important property. You don’t then waste time after you’ve had an offer accepted, scrabbling around trying to find a lender that will accept this situation.
Often you could have prepared for that before looking for a property. So seeking advice early is the biggest tip I could give.
Key Takeaways:
- The requirements for a new build mortgage are generally the same for first-time buyers as for any other buyer.
- A minimum deposit of 5% is common for new build properties, though some lenders may require 10% for new build flats. Some lenders offer less than 5% for first-time buyers.
- Government schemes can be used to get a mortgage on a new build, provided other scheme criteria are met.
- Be aware of developer incentives, as these can impact the required deposit if they exceed 5% of the property value.
- Speaking to a mortgage advisor early, before finding a property, is crucial to understand borrowing capacity and identify potential issues that could lead to a declined application.
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What you need to know…
The actual amount you can borrow will depend on your credit commitments, your regular monthly outgoings and how each lender assesses your income.
Lender’s affordability checks can differ meaning that the amount you can borrow may change from lender to lender. That’s where the expertise of our personal advisers comes in and where our independent status benefits you.
The minimum deposit required is 5% of the property purchase price. Most lenders will allow the deposit to come from a gift and some lenders will even consider this being raised via a personal loan. There are government incentives to help boost your savings if you are a first time buyer. Depending on your circumstance you may either need to have a larger deposit or will perhaps want to put a larger deposit down, due to preferable interest rates.
Because we are independent mortgage brokers we will be able to secure you the best deal for your circumstance.
An Agreement in Principle, also known as a ‘Decision in Principle’ will be provided after affordability and credit checks have been approved. An Agreement in Principle is extremely useful to increase your confidence when viewing and offering on properties. Estate Agents will typically want to see an Agreement in Principle before presenting your offer to the seller. Our personal advisers can help you with this.
It’s a requirement of your mortgage to have buildings insurance. This covers the bricks and mortar of the property.
It’s also a good idea to take advice from your personal adviser on protecting you and your loved ones if something bad happens. For example: Life Cover, Critical Illness Cover and Income Protection.
Being accepted for a mortgage does depend on your circumstances. We are experts with all types of mortgages…. We specialise in obtaining mortgages for the self-employed, contractors, construction industry scheme (CIS) workers and those with historic adverse credit (as well as employed people of course). In all these situations we can frequently secure high street deals. Being independent and experts is a real benefit in these circumstances.
Your monthly payments will vary depending to your chosen mortgage term, choice of mortgage product, how much deposit you have and repayment type. It is best to chat with a personal independent adviser to find out exactly what interest rate and term you can secure to give an accurate monthly payment.
Most of the first time buyers we have helped secure a mortgage are paying less on their mortgage than they used to pay on rent. This does, however, depend on circumstances. The mortgage term chosen is a major factor which can be dictated by your age and intended retirement age. Of course, it is also worth noting you are paying back the mortgage and once it is repaid you won’t have any rent to pay.
There are costs associated with purchasing your first home. You will need to pay legal fees and other potential costs include a survey fee, stamp duty (which is a property land tax) and administration fees. There are First Time Buyer government incentives on savings and stamp duty that can help you with raising the monies for a deposit, costs and reducing stamp duty. Our personal advisers can give guidance within a free consultation.