New build mortgages

The exchange deadline

Developers typically require exchange of contracts within twenty-eight days of reservation. That is a tight window for a mortgage. The right lender turns offers in fourteen to twenty-one days on a clean case; the wrong lender misses the developer deadline and you risk losing the reservation fee. We pre-screen lender turnaround times before recommending.

The offer window

For an off-plan property completing in six or twelve months, the mortgage offer needs to remain valid all the way through. Most lenders give six months as standard. Some extend to nine or twelve months on new build. A small group will re-issue at completion if the original offer expires. We pick a lender whose offer window matches the build programme.

Builder incentives and the lender

Lenders treat developer incentives differently. Most accept incentives up to 5% of the purchase price (deposit contribution, stamp duty paid, cashback). Above 5% the loan amount is usually reduced pound for pound by the excess. White goods, flooring and curtains are usually disregarded. Pre-completion deposits paid by the developer to the buyer are scrutinised. We package the incentive structure so it lands cleanly.

Worked example, builder incentive at the 5% threshold

Property £320,000, developer offering 5% deposit contribution (£16,000) plus £3,500 of carpets, curtains and white goods. Total incentive £19,500, which is 6.1% of purchase price. Lender that caps incentives at 5%: deducts £3,500 of excess from the loan amount, mortgage available drops by £3,500. Lender that distinguishes deposit contribution from cosmetic incentives: takes the £16,000 (5%) as a deposit contribution and disregards the cosmetic items entirely, no loan reduction. We pick the second type. On a 5%-deposit buyer with £16,000 of own funds, this is the difference between a clean 90% LTV (Loan to Value) case and a slightly tighter one.

Valuation on new build

New builds carry a "new build premium" that lenders sometimes discount in valuation. New-build valuations can sometimes differ from the agreed purchase price, depending on the lender's valuation assessment and local market evidence. Different lenders apply different policy; some use the developer price as evidence, some discount it. The choice of lender directly affects the loan amount.

5% deposit on new build

Deposit Unlock and Own New are the two current 5% deposit routes for new build. Both work on a different lender pool and pricing structure to standard 95% LTV products. We compare both routes against a standard 5% deposit route and tell you which fits.

Building warranties

Lenders require an acceptable warranty (NHBC, LABC, Premier, BLP and others). Check the warranty before reservation; a non-standard warranty narrows the lender pool sharply and can derail a sale.

Common pitfalls we see

Reserving without an AIP (Agreement in Principle) and missing the 28-day exchange window. Picking a lender with a short offer window for an off-plan completing 9 months out. Underestimating builder-incentive treatment and finding the loan reduced at offer. Forgetting that a downvalue on new build is a real risk and the appeal route involves comparable evidence we have to assemble. We work all four around the developer reservation timeline.