New Build Mortgages

Most developers require exchange of contracts within 28-42 days of reserving a new build property. This is significantly faster than the standard resale process, where exchange might take two to three months. Securing a mortgage offer within this window requires an efficient application process - working with a broker who understands new build timelines is essential.

Standard mortgage offers are typically valid for six months. On off-plan new builds - where you are purchasing before construction is complete - completion may be 12 to 24 months away. If the offer expires before completion, you must reapply. Some specialist lenders offer extended validity periods of 9-12 months for new build purchases; others will automatically extend if the build is delayed. Understanding the offer validity terms before committing is critical.

Developers frequently offer incentives to buyers - cashback, free flooring, part-furnished finishes, or contributions to stamp duty or legal fees. Lenders require these incentives to be disclosed and deduct their value from the purchase price when calculating LTV. A 5% builder cashback on a £300,000 purchase means the lender calculates LTV against £285,000 - which can affect rates and maximum borrowing.

Shared Ownership allows buyers to purchase a share of a new build property - typically 10-75% - paying a mortgage on their share and rent on the remaining share owned by the housing association. Mortgages for Shared Ownership are a specialist product, with a specific lender panel that understands the lease structure and staircasing provisions. Not all mortgage lenders will accept Shared Ownership as security.

New builds sometimes receive mortgage valuations at or below the purchase price, particularly in areas where developer premiums are significant. A below-purchase-price valuation reduces the LTV headroom and can require additional deposit contribution. Some specialist lenders accept the developer's sales price more readily; others apply a new build discount. Understanding lender valuation approaches for new builds in advance avoids unwelcome surprises at the valuation stage.

New build flats have stricter LTV limits than houses with many lenders - often 75% LTV maximum - due to the greater difficulty of selling flats in a falling market and concerns about leasehold complications. New build houses are generally accepted on standard terms. Understanding this distinction is important when selecting a lender for a new build flat purchase.