Securing a mortgage for a new build property involves some unique considerations compared to buying an existing home. Here’s what you need to know:
1. Understand the New Build Market
- Types of New Builds: New build properties include newly constructed homes, conversions of existing buildings, and properties being bought off-plan (before construction is completed).
- Builder Reputation: Research the reputation of the builder or developer. Look into their previous projects and any feedback from past buyers to ensure quality and reliability.
2. Check Mortgage Lender Requirements
- Lender Criteria: Different lenders have varying criteria for new builds. Some may have specific requirements related to the type or stage of construction.
- Deposit Requirements: Lenders may require a higher deposit for new builds compared to existing homes, particularly for off-plan purchases.
3. Secure a Professional Valuation
- Valuation: Obtain a professional valuation of the new build property. This is especially important for off-plan purchases, where the valuation will be based on projected completion and market conditions.
- Survey: Consider having a detailed survey done to check for any potential issues with the construction quality.
4. Understand the Purchase Process
- Off-Plan Purchases: When buying off-plan, you’re purchasing a property before it’s built. This requires careful consideration of the developer’s track record and the projected completion date.
- Completion Dates: Be aware of the expected completion date and any potential delays. Mortgage offers typically have a time limit, so you may need to extend or reapply if the completion is delayed.
5. Explore Government Schemes
- Help to Buy: Check if you’re eligible for government schemes like Help to Buy, which can assist with deposits and provide favorable terms for new builds.
- Shared Ownership: This scheme allows you to buy a share of the property and pay rent on the remaining share. It can be a useful option for new build properties.
6. Prepare Your Financial Documents
- Income and Savings: Provide detailed evidence of your income and savings. Lenders will need to assess your ability to manage mortgage payments and cover the deposit.
- Credit History: Ensure your credit history is in good shape. A strong credit score can improve your chances of securing a mortgage and getting a favorable interest rate.
7. Consider the Property’s Future Value
- Resale Potential: Evaluate the potential future value of the property. New builds may depreciate slightly upon initial resale, so consider how long you plan to stay in the property.
- Market Conditions: Research local property market conditions to understand how new builds are valued and any factors that may affect their value.
8. Review Mortgage Offers and Terms
- Interest Rates: Compare interest rates from different lenders. Some lenders may offer special rates for new build properties, but be sure to review the terms carefully.
- Loan Terms: Review the mortgage terms, including the loan duration, repayment schedule, and any early repayment penalties.
9. Plan for Additional Costs
- Fees and Charges: Be prepared for additional costs associated with new builds, such as legal fees, stamp duty, and any fees charged by the developer.
- Customization Costs: If you’re buying off-plan, you may have the option to customize certain aspects of the property. Budget for any additional costs associated with customization.
10. Work with a Real Estate Agent or Broker
- Expert Guidance: Consider working with a real estate agent or mortgage broker who has experience with new build properties. They can provide valuable insights and help you navigate the process.
11. Review the Contract and Developer’s Terms
- Contract Review: Carefully review the contract with the builder or developer. Ensure all terms are clearly outlined, including completion dates, warranties, and any guarantees.
- Warranties and Guarantees: Check the warranties provided by the builder, which may cover structural defects and other issues.
Summary
Securing a mortgage for a new build involves understanding lender requirements, obtaining a professional valuation, and considering government schemes that may be available. By preparing thorough financial documentation, reviewing mortgage offers, and planning for additional costs, you can navigate the process effectively. Working with experts and carefully reviewing contracts will help ensure a smooth purchase process and successful homeownership in your new build property.