New-build mortgages

A new-build mortgage could help you buy a recently built home, or a property that’s been recently converted or renovated.

How much deposit do I need to buy a new-build?

Typically, for a new-build mortgage, you’ll need a deposit of at least 10-15% of the property’s value.

For example, if the new-build home you want to buy costs £250,000, you’ll need a deposit of at least £25,000.

What’s classed as a new-build property?

A new-build property is one that’s been newly built, or substantially converted or renovated, within the past two years and not sold during that period.

Each lender has different criteria, so always read the small print before applying for a new-build mortgage.

If you’re buying a property where work hasn’t yet started, or the property is in the process of being built, this is known as buying ‘off-plan’.

Yes, lender criteria is typically stricter if you’re applying for a new-build mortgage. This is because lenders see these mortgages as riskier, as the property may decrease in value for the first few years after it’s built.

This doesn’t always happen, but if it does, then the lender has less security for the loan it has provided. As a result, it may charge you a higher rate of interest and ask for a larger deposit than you’d typically need for an older property.

A mortgage offer is typically valid for three to six months. If it takes longer than that for your new-build to be finished, then you may need to re-apply for the mortgage (or try to negotiate a longer validity period in the first place).

And if your financial circumstances have changed, you may find it harder to secure a good mortgage deal for your new-build.

Off-plan buyers

Buying off-plan means the home isn’t built yet – you’re buying based on floorplans and drawings. You might want to get an Agreement in Principle (AIP) before committing to buy, then apply for a full mortgage when the build is nearly finished.

People buying homes under two years old

Even if someone has lived in it, a home less than two years old usually still counts as a new-build.

People buying renovated properties

Substantially renovated or converted properties, such as a barn conversion, can be classed as new-builds. But always check with the mortgage provider before applying to see if this is the case.

Here’s what to think about before you take out a new-build mortgage.

Eligibility criteria

To apply for a new-build mortgage, you generally need:

• To be aged 18 or over

• To be able to repay the mortgage in full by age 75

• Proof of ID, such as a passport or driver’s licence

• Evidence of a stable income, such as payslips or tax returns.

How much deposit you have

Depending on the lender, you might need a 10-15% deposit for a new-build house and a 15-25% deposit for a new-build flat.

Some schemes are available to help you buy a new-build with a lower upfront cost. See below for details.

National House Building Council (NHBC) Buildmark

Newly built properties come with a compulsory NHBC Buildmark, which is a 10-year warranty covering quality of construction. Mortgage lenders usually need to see evidence of the Buildmark to give a mortgage application the green light.

It’s easy to check whether the builder of a property has been registered with the NHBC through the NHBC website.

Here are some different ways you can get help buying a new-build:

• Shared Ownership – allows you to buy a 10% to 75% share in a new-build property (or an existing home) and pay rent to the housing provider on the rest. Many providers require an initial purchase of at least 25%.

• Lifetime ISA – a tax-free savings account to help those aged under 40 (at the time of opening) save up a deposit on their first home. The government adds a 25% bonus to your savings, up to a maximum of £1,000 per year.

• First Homes – designed to help first-time buyers in England onto the property ladder. New-build homes are offered at 30% to 50% less than their market value. Eligible buyers must have a household income not exceeding £80,000 (£90,000 in London). First Homes cannot cost more £250,000 (or more than £420,000 in London) after the discount has been applied.

• Mortgage guarantee scheme – this government scheme enables eligible first-time buyers and home-movers to buy a home with a 5% deposit.

• Deposit Unlock scheme – developed by the Home Builders Federation to help buyers get mortgages for new-builds with a 5% deposit. However, you can only buy a new-build home from participating builders, with a mortgage from participating lenders, so your options are limited.

In Wales, the Help to Buy scheme provides an equity loan of up to 20% of the price of a new-build and has been extended to run until September 2026. In Scotland, the New Supply Shared Equity (NSSE) scheme helps you buy a new-build home from a council or housing association.

Comparing new home mortgages with Compare the Market is easy. We’ll do all the hard work for you.

You just need to tell us the property value, what deposit you have and the period you want to repay the mortgage.

Plus, you can get free, impartial mortgage advice from our specialist partners L&C Mortgages**.

About L&C Mortgages

**L&C Mortgages is a multi-award-winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).

L&C is not a part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria.

L&C will not charge you a broker fee should you decide to proceed with a mortgage.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.