What is the Loan-To-Value ratio (LTV)?
The loan to value ratio of a mortgage indicates how much of your property you own outright (covered by your deposit, and commonly known as equity) and the amount you are borrowing (covered by your mortgage), expressed as a percentage. To compare top mortgage rates and find the best NewBuy mortgage deals for you, use the mortgage calculator to search over 5,000 mortgage deals based on your personal circumstances.
What are the advantages of a new build mortgage?
There are several reasons why people choose to take out a mortgage on a new build home, including:
More accessible - It can sometimes be easier to get a mortgage on a new build property due to the influence of schemes such as NewBuy, which have forged links between property developers, mortgage lenders, and the Government. This could help buyers to get a higher LTV mortgage than might be available on an older property.
– Schemes such as NewBuy offer the option of lower deposits on new build homes, and it may be possible to get a new build mortgage with a deposit of as little as 5%.
– Buying a newly build house means that you shouldn’t need to finance expensive renovation or redecoration when you move in. New homes also tend to have higher standards of insulation and eco-efficiency than older properties, which could save you money on energy bills.
How does a NewBuy mortgage work?
If you are thinking of getting a mortgage on a newly built property, you may want to consider the NewBuy scheme. This is a Government initiative, launched in March 2012, which aims to help people in England to buy a new build home. You may be eligible for the NewBuy scheme provided that you have a deposit of at least 5% - this is a smaller deposit than is normally required to secure a mortgage.
NewBuy is available in England on all new properties offered by home builders participating in the scheme, up to and including a sale price of £500,000.
Most major and many smaller home building companies have now registered with NewBuy, or are in the process of registering, but check with the building company before you apply for a NewBuy mortgage.
New home buyers wishing to take advantage of the scheme will need to qualify for a mortgage with a mortgage lender in the usual way and be subject to the lender’s normal assessment criteria.
If you apply for a new build mortgage, lenders will consider criteria such as:
- Do you earn enough to borrow the amount you want?
The stability of your income - Are you self-employed or new in a job?
Your outstanding debts
- How much debt do you have?
Your credit rating - Have you ever missed a mortgage payment or other repayment in the past? Do you have any County Court Judgments (CCJs) against you? Have you even been bankrupt?
Your eligibility for the NewBuy scheme – if you apply for a mortgage under the NewBuy scheme you will be required to fulfill certain additional criteria specific to this scheme.
How much will a new build mortgage cost?
The cost of mortgages for new build houses depends on your circumstances – if you have a substantial deposit or equity in your current property, you can purchase a new build property as you would any other house. However, new build homes can be appealing to first time buyers or those with low deposits since they are often eligible for schemes such as NewBuy. And can be purchased with a high loan to value (LTV) mortgage. If you opt for this type of mortgage on a new build home, it will generally be more expensive than mortgages with lower LTVs as the bank is taking on more risk due to the greater amount owed. To find the best mortgages for new build houses, click on the FREE mortgage calculator above and compare over 5,000 deals tailored to your personal requirements.