Mortgages for new builds in the UK can be a bit different from those for existing properties. Here are some key points to consider:
1. Types of Mortgages for New Builds
- Fixed-Rate Mortgages: Your interest rate stays the same for a set period, providing stability in monthly payments.
- Variable-Rate Mortgages: Your interest rate can fluctuate, which means payments could go up or down.
- Help to Buy Scheme: A government scheme that helps with buying new build properties, usually involving a combination of equity loans and a mortgage.
2. Deposit Requirements
- Deposits for new builds are often higher than for existing properties. Many lenders require a deposit of at least 10-20% of the property’s value.
3. Valuation Issues
- Valuation Concerns: Lenders might be cautious with new builds due to concerns about overvaluation. A valuation survey is essential to ensure the property is worth the amount being borrowed.
- New Build Warranty: New builds usually come with a warranty, such as the NHBC (National House Building Council) warranty, which can reassure lenders.
4. Builder Incentives
- Builders often offer incentives like covering some of the mortgage fees or providing cash-back offers. However, these incentives might not always be in your best financial interest, so it’s important to weigh them carefully.
5. Completion Delays
- New builds can sometimes face delays in completion. It’s crucial to ensure your mortgage offer is valid for a period that allows for potential delays.
6. Specialist Lenders
- Some lenders specialize in new builds and may offer more tailored products. It’s worth consulting a mortgage advisor who understands the specifics of new build properties.
7. Additional Costs
- Stamp Duty: Ensure you budget for stamp duty, which can be a significant cost.
- Legal Fees: You’ll need a solicitor to handle the legal aspects of purchasing a new build.
8. Government Schemes
- Keep an eye on any government schemes or grants that might be available for new build properties, as these can provide additional financial support.