Your cookie preferences


We use cookies and similar technologies. You can use the settings below to accept all cookies (which we recommend to give you the best experience) or to enable specific categories of cookies as explained below. Find out more by reading our Cookie Policy.

Select cookie preferences

Skip to main content

New build mortgages

Newer homes are often in better shape and more energy efficient than older homes, but getting a mortgage for a new build can be a bit more difficult. We look at the options available to those looking to buy a new build home and how to avoid the common pitfalls.

Share this guide
New build homes - how do you get a mortgage for a house that's still being built?

Compare mortgages with Uswitch

Find the mortgage that's right for you

What is a new build property?

Different lenders have slightly different definitions of ‘new build’ for mortgage purposes, but generally speaking it’s a property that is newly built and has never been bought or lived in by anyone. 

It can also include properties that have recently been converted or substantially renovated specifically for the purpose of sale, or those that are not yet fully built, which you can buy ‘off plan’. 

What are the benefits of new build homes?

There are a number of benefits to owning a brand new home, and these include:

  • It should be in pristine condition with no decoration or renovations needed

  • You can often choose the fixtures and fittings, such as appliances or flooring, especially when it's off-plan

  • Developers may offer incentives to convince you to buy from them – like paying your stamp duty, for example (although the value of any benefits could be deducted from the value of the property for mortgage calculation purposes)

  • You may be able to use a scheme, such as the first homes scheme or shared-ownership scheme to make a new build more affordable

  • You don't have to worry about a property chain delaying the buying process 

  • Newly built homes are likely to be in a better structural condition than older ones and have more modern elements that need less maintenance

  • New homes are more energy efficient

  • New builds come with a warranty that covers you for any property defects

What are the drawbacks of new build homes?

There are pros and cons to every type of home, and whilst there are lots of benefits to owning a new build home, there can also be some drawbacks, such as:

  • They often cost more than older homes for an equivalent sized property in the same location

  • The property loses value more quickly as it’s no longer new as soon as you’ve bought it

  • New builds are often smaller than older homes

  • You may have to pay for the maintenance of any shared spaces as many homes are part of a larger development

  • It can be harder to get a mortgage for a new build and the legal process can be a little more complicated

  • There could be delays if you’re buying off-plan - so your mortgage offer could expire before you're ready to complete the purchase

  • If an off-plan property drops in value before its completed, you’ll still have to pay the price you agreed on, which could mean your mortgage provider won’t lend you the amount you need as they don't think the property is worth it

  • You’ll usually pay a reservation fee to secure the property, which you’ll lose if you don’t or can’t go through with the purchase. The developer could also sue you if you back out of the sale

Applying for mortgages on new build houses

The mortgage application process is the same regardless of whether your home is a new build or not, but if it’s off-plan you may need to send the lender some blueprints and images showing what the property will eventually look like.

How to get a mortgage for a new build home

Lenders may require a higher deposit and or charge higher interest rates when you’re buying a new build home, as there’s a risk that its value could fall in the first few years. This is because it will lose its ‘brand new’ appeal once someone has owned it. 

If you're buying a new build home 'off-plan' you may find it harder to get a mortgage than you would buying a property that has already been built, as the property price can change during the build period, making it a greater risk to lenders, particularly if it falls in value.  

Timescales for getting a new build mortgage

The timing of your mortgage application is very important when buying a new build home, particularly if it is incomplete. Your mortgage offer will have a validity period (typically around six months), meaning it could expire before the home is built. You may be able to get an extension of the mortgage offer if the property is not completed in time,but this is at the lender’s discretion. 

If the lender refuses to extend the offer, you will have to submit a new mortgage application. However, there are some more specialist lenders who have mortgages designed to cater to new-build buyers’ needs. 

Sometimes referred to as new build mortgages, the offers remain valid for longer on these products, typically between nine and 12 months. A mortgage broker will be able to help you find a lender offering a mortgage with a longer validity period, should you wish to buy ‘off-plan’. 

Mortgage lender criteria for new build mortgages

The majority of lending criteria is the same whether you buy a new build property or not, although there are typically stricter loan to value (LTV) limits on new build properties. The LTV is the maximum percentage of the sale price that they are willing to lend. 

For an older property, it’s common to borrow as much as 95% of the cost of your home, meaning you can secure one with as little as 5% deposit. With new-build properties, 15% is more likely to be the minimum deposit requirement, with some lenders requiring as much as 25%.

Developer incentives

Another thing to be aware of is how developer incentives are viewed by your mortgage lender. Although incentives, such as free stamp duty, that may be offered to persuade you to buy a new-build home seems like a great benefit, lenders will be cautious around the total monetary value of any benefits you receive.

Typically lenders are comfortable with incentives that are worth as much as 5% of the property value, but any more than this, they may reduce the amount you’re able to borrow, as they will deduct this value from their valuation of the property. 

For example:

If your home costs £150,000 and the total cost of incentives is £15,000 (or 10%), the lender could reduce the LTV and/or increase the interest rate on your borrowing.

First time buyer new build mortgages

There are a number of government home ownership schemes that can be helpful to both first-time buyers and certain other applicants.

The First Homes scheme was launched in June 2021, and provides a discount of between 30%-50% on the price of certain new build homes in England. This is intended to help first time buyers on a lower income to get a foot on the property ladder. 

Key workers will likely be prioritised for access to the scheme, but it’s open to anyone that qualifies for the below criteria:

  • 18+

  • First-time buyer

  • Can get a mortgage for at least half the price of the home

  • Have a household income of no more than £80,000 (£90,000 in London)

  • The home cost more than £420,000 in London, or £250,000 anywhere else in England (post discount)

The local council may also insist that users of the scheme are:

  • Key workers (or essential workers)

  • Local connections to the area through residency or work

  • On lower incomes

Unless they are:

  • A member of the armed forces

  • The divorced or separated spouse or civil partner of a member of the armed forces

  • A widow or widower of a deceased member of the armed forces (if their death was caused wholly or partly by their service)

  • A veteran who left the armed forces in the last 5 years

The properties in the scheme have been built specifically for this purpose and with the intention that they will remain as affordable housing. This means that you can only buy one if you are happy for it to remain a first home when you move on. You can only sell it to another eligible buyer and you must give them the same percentage discount that you got.

Shared ownership scheme

There are a number of new-build housing developers that offer shared ownership purchase through a housing association. Shared ownership allows you to buy a percentage of the property and rent the remaining share from the housing association, who own the rest of your home.  

With many shared ownership properties, you have the opportunity to gradually increase your ownership over time, so that you can eventually own it outright. 

Deposit Unlock scheme

The Deposit Unlock scheme is the first non-government home ownership scheme that is widely available in the UK and was developed by the Home Builders Federation to help people buy a new build home with a deposit of just 5%.

This may go some way to replacing the government’s help to buy scheme, which is no longer open to new applicants in England and will close to Welsh applicants in 2026. However, differs slightly as it’s not just available to first time buyers, those moving up the chain are also welcome to apply.

Where to buy a new build home

Most property search engines have a new build home filter, but many developers also have their new build homes listed separately, including information on whether or not they are eligible to be bought through a government financing scheme like the first home scheme.

Look for the NHBC Buildmark

The NHBC (National House Building Council) Buildmark is a 10-year warranty covering quality of construction. This will give you peace of mind about the build quality of your new home, but will also be an important factor for mortgage lenders, who are unlikely to approve a mortgage on a property without this guarantee.

FAQs

How much deposit do you need for a new-build mortgage?

You will usually need at least 15% deposit to secure a mortgage. However, there are a few home ownership schemes that are available on certain new-build homes, such as the first homes scheme, deposit unlock or shared ownership that allow you to buy with a smaller deposit.

Is it possible to find 90% LTV new build mortgages?

Some mortgage lenders restrict their loan-to-value offers with new builds, so if you can save more than 10% deposit ahead of applying for a new build mortgage, you’ll have a better chance of securing a competitive interest rate. That said, it's possible to find new build mortgages at 90% LTV when you use a home ownership scheme.

How long does it take to get a mortgage for a new build?

Unless you're buying a property that is not yet built - in which case there can be delays - mortgages on new builds shouldn't take any more time that it would to get a mortgage on any other property.

Read more about how long it takes to get a mortgage in our guide.

Do new build houses lose value after buying?

Yes, unfortunately they do. The reason for this is very simple, a property can only be brand new once. It will never be brand new again once you've owned it, so the value will drop as soon as you buy it.

However, keep in mind that the amount of money lost in value may have been spent on decor and new fittings had you bought an older home. Some people feel that this balances out the loss in value.

Compare mortgages with Uswitch

Find the mortgage that's right for you