Finding a mortgage for a new build property

March 14, 2016 by Brendan O'Neill

Borrowers

When you buy a brand new home, you may face some problems when trying to obtain a mortgage. While some lenders are happy to lend money to buy a new property, others may refuse applications for a new build. Buyers of new properties often require some guidance from a mortgage adviser who has completed CeMAP training, so that a suitable mortgage can be found.

Buyers who are joining the new Help to Buy scheme, launched by the government, may find that some lenders won’t offer mortgages. Santander, Halifax and Barclays are among those who do offer mortgages using the scheme.

As some lenders believe that a new property may lose value as soon as you purchase it, you may discover that you are asked for a higher deposit from some lenders. You may also be offered an incentive to persuade you to buy your new home. However, this incentive may be deducted from the purchase price by the lender, which means you have to find more for a deposit.

Check with lenders to see what their definition of a new build is. Some may class a brand new property which hasn’t been lived in as a new build, while others may define it as a property which has been converted into flats, or a house which is only a couple of years old.

Lenders will restrict the number of mortgages they will approve for a particular site. If you are one of the last buyers to purchase at a site, you may find that those same lenders will refuse you a mortgage. Seeking advice from an adviser is recommended when buying a new property.