New build first-time buyer mortgages

New build covers any property bought direct from a developer that has not been lived in before. Lender treatment varies for several reasons: new build can be priced at a premium over comparable second-hand stock, mortgage offers may need to last long enough to handle a build delay, and the property is sometimes not finished at offer stage.

The exchange deadline

Developers typically demand exchange of contracts within 28 days of reservation, sometimes as little as 21 days on hot launches. That is a tight window for a mortgage offer. The right lender turns offers in 14 to 21 days on a clean case; the wrong lender misses the developer deadline and you risk losing the reservation fee (typically £500 to £2,000). We pre-screen lender turnaround times before recommending which one to apply to.

Developer 5% deposit contributions

Many developers offer a 5% deposit contribution to qualifying buyers, effectively lifting your buying power from a 5% buyer deposit to a 10% loan-to-value (LTV) position. The contribution is paid at completion and reduces the mortgage you take. Lenders accept these contributions, but the amount is sometimes capped (often at 5% of purchase price) and the property must usually be valued at the full price excluding the contribution.

The Own New scheme

Own New is a scheme where the developer pays the lender a fee equivalent to a deposit boost, and in return the lender offers a reduced rate for the first two or three years of the mortgage. A small group of lenders are involved. Instead of receiving a 5% deposit contribution at completion, your headline rate drops materially for the introductory period.

When we look into Own New for clients there are often more savings to be made by taking a 5% deposit contribution and paying down the mortgage faster. We run both side by side before recommending one.

Worked example, Own New versus 5% deposit contribution on a £320,000 new build

Buyer with 5% own deposit (£16,000). Developer offers either: (A) a 5% deposit contribution (£16,000), giving a 10% effective deposit and a mortgage of £288,000; or (B) Own New, where headline rate is reduced by 1.0 to 1.5 percentage points for two years on a 5% deposit, mortgage of £304,000. On a 25-year repayment, route A starts at a higher monthly cost but on a much smaller balance. Route B has lower payments for two years but the balance is bigger and the rate normalises after the introductory period. We model the five-year total cost on both routes; route A typically wins for buyers who can afford the higher initial monthly, route B helps cashflow during the early years.

Lenders comfortable with new build

Some lenders are bullish on new build with strong loan-to-value tables. Some discount the property valuation to handle the new-build premium. Some are conservative and reduce the loan available materially. We pick a lender whose new build appetite matches the property and the developer.

Mortgage offer length and build delay

New build mortgage offers usually need to be valid for six months, sometimes nine, to handle a build delay. Most lenders will extend an offer if the build slips, but it depends on the lender and the reason. We track the build status with you and refresh the offer if it slips. A small group of lenders will re-issue the offer at completion regardless of the original expiry, which is the safest route for off-plan purchases with completion 9 to 12 months out.

Building warranty

Lenders require an acceptable warranty (NHBC, LABC, Premier, BLP and a small number of others). Check the warranty type before reservation; a non-standard warranty narrows the lender pool sharply and can derail a sale. Most large developers use NHBC; smaller developers often use LABC or Premier.

Common pitfalls we see

Reserving without an AIP (Agreement in Principle) ready and missing the 28-day exchange. Accepting a 5% deposit contribution where the lender quietly reduces the loan amount by the contribution figure (always read the lender policy on builder incentives). Ignoring the building warranty type and finding out at survey it knocks out half the lender pool. Forgetting that snagging issues need to be raised in writing within the warranty defect period. We work all of these in the build-up to reservation, not after the fact.