There are many advantages when purchasing a new build property, but there are also a few things you need to consider.
Mortgage lending for new build homes
There are many mortgage lenders that will lend on new build houses, however this becomes restricted on new build flats. The maximum Loan to Value (LTV) is generally lower on new build properties compared to older properties, this results in larger deposits being required when purchasing a new build home. Typically a deposit of at least 10% (90%) will be required for a new build home and at least 15% (85% LTV) for a new build flat.
When looking for a mortgage on a new build property, you should look for an independent mortgage advisor who will streamline the mortgage process by identifying the overall cheapest mortgage available to meet your requirements. This covers; interest rate, loan size, arrangement fees, speed of service and lender criteria from the thousands of mortgages that are available on the market, this can include exclusive deals which are not available directly from lenders.
Once the mortgage application process is underway, the adviser should handle everything through to completion for you and have regular contact with yourself, the solicitors and the builder / estate agent in order to meeting the deadlines for exchange and completion.
New build advantages
- The majority of new build developments come with a warranty such as NHBC which come with a 10-year warranty and protection scheme www.nhbc.co.uk. There are also other companies offering warranties and insurance for new build homes which will be required to be in place by a lender when applying for a mortgage.
- Major repairs and redecoration should be kept to a minimal level for the first few years.
- Professional management company could be employed to ensure the common areas of the building and estate are maintained to a high level and adequate security measures are adhered to.
- If the property is off plan (not yet built or completed), you may be able to work with the developer / builder to request certain specifications to meet individual requirements and tastes such as carpets, wooden flooring, tiles, wall colour, kitchens, bathrooms and wheelchair access.
New build disadvantages
- The anticipated target completion date for the property to be ready can be delayed due to unforeseen circumstances such as poor weather conditions, developer funding issues, staff sickness and material availability.
- Very common for settlement effects to appear on new build properties within the first few years of occupation such as cracks from dried out plaster. This is why warranties such as the NHBC should be in place and are required by lenders.
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Your home may be repossessed if you do not keep up repayments on a mortgage.