Mortgage for New Build House

Mortgage for New Build House

Compare Latest UK Mortgage Deals

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

Buying a property can be an expensive exercise and it is important that you are aware of all the costs that come into play when buying your home.

The costs relating to your mortgage will be set out clearly by the lender in what is known as the “Keyfacts” document provided to you.

These costs may include:

  • Arrangement Fee – Charged by the lender to cover the administration costs of processing your mortgage. This will vary from deal to deal. You normally have the option of adding this fee to your mortgage but this will increase your cost of borrowing over the mortgage term.
  • Mortgage broker Fee – If you have used a mortgage broker to help arrange your mortgage for you then a fee may be charged which will be outlined in your keyfacts document.
  • Mortgage Account Fee – Applied by the lender at outset when you first take out your mortgage to cover the set up and termination costs of your mortgage.
  • Valuation Fee – Charged by the lender to value your property in assessing the value for mortgage purposes.
  • Re-inspection fees – If a lender has required you to make agreed repairs to the property a re-inspection may be required
  • Higher lending charge – If you are borrowing a high loan to value the lender may decide they wish to insure the possibility that you may need to sell your home and this results in a loss.
  • Early redemption charges – If you pay off part or all of your mortgage earlier than expected the lender may charge you a fee – this will be covered in your keyfacts document.
  • Mortgage exit fee – Paid to your lender when you repay your mortgage.
  • Insurance costs – as part of your mortgage you may be encouraged to take out insurance either by a broker or the lender to cover buildings insurance and other optional insurance such as mortgage life insurance.

  1. If you are unsure of your mortgage options, seek mortgage advice from a FCA regulated independent mortgage broker
  2. Maximise the deposit you can put down on your property to benefit from the most competitive Mortgage interest deals.
  3. Read the Lender Mortgage key facts document carefully to understand the costs being applied by the lender.
  4. Ensure you are comfortable that mortgage repayments (whether repayment or interest only) fall within your budget.
  5. Remember that mortgage discounts are temporary, and borrowing rates may increase when the discount period ends.
  6. If you are remortgaging, ask your current lender what deal they can offer you, as well as shop around.
  7. If your lender’s property valuation is too low, ask them to reconsider and provide supporting evidence from the sale price of other properties in your area.
  8. For interest only mortgages ensure that you plan carefully how to pay off your mortgage and check at regular intervals that your repayment strategy is on track.
  9. At the time of writing interest rates are at record lows. While borrowing is cheap now, this situation may change, so factor in a rise in interest rates into your budgeting calculations.
  10. Consider mortgage unemployment insurance in the event that you lose your job. This may provide valuable breathing space in covering mortgage repayments while you look for a new job.

It is very important that when considering a mortgage you work out how much you can afford.

While there is a greater onus on mortgage lenders to lend responsibly you will also need to consider what level of borrowing is appropriate for your circumstances.

In simple terms lenders will base how much you can borrow on a multiple of your income (joint income for couples). However there are a number of factors that will determine what you can borrow from a mortgage company.

Mortgage lenders are required to apply strict rules to what they can lend to you based on your personal circumstances. In assessing affordability lenders will not only look at your income but also your outgoings e.g. monthly household bills. Lenders will look at your bank statements typically over the last 3 months to determine whether you can afford the mortgage you are looking for.

Many mortgage deals have initial periods where preferential terms are offered and borrowing costs are lower than normal – when this discounted period ends make sure you can afford any reasonable increase that may kick in. In assessing affordability lenders will take into account your income and outgoings and your current employment history. In calculating disposable income your total income will be taken into account less other debts you may have and living expenses.

The lender considering your mortgage application will have their own method of assessing affordability but it makes sense to do your own budgeting calculations to ensure the monthly repayment requirement is well within your budget.

In calculating how much you can borrow the lender will apply a maximum amount you can borrow called the loan to value of the property (LTV). E.g. If you are a first time buyer the lender may stipulate a LTV of 95% which means they are prepared to lend up to 95% of the value of the property (this will be assessed by the mortgage company’s own appointed surveyor). In this scenario the first time buyer would be required to put down at least 5% deposit towards the property purchase. The mortgage rate deals offered by a lender will be affected by the level of deposit that can be put down.

Generally speaking the higher the deposit that can be put down the better the mortgage rate can be achieved.

See how much you can borrow on a mortgage »

Virgin Mortgage – 2 Year 75% LTV

HSBC – 2 Year Fixed Deal

  • Initial Rate – 1.24%
  • 75% Loan To Value (LTV)
  • 2 Year Fixed
Overall cost for comparison 3.30% APRC

Click here for more details


Compare Mortgages for New Build Houses

If you want to buy a new build property, there are a variety of options on the market, including Government-backed schemes such as NewBuy, which offers high loan-to-value (LTV) mortgages requiring a low deposit to those looking to purchase a newly built house. This scheme is designed to assist first time buyers and those who would otherwise struggle to raise a deposit. The scheme is also intended to stimulate the construction industry by encouraging the building of new homes. To compare a range of mortgages for new build houses and other first time buyer mortgage deals, use our FREE mortgage calculator, below:

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.
  • Lower deposit  – 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%.
  • Good condition  – 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:

  • Your earnings  – 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.