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New Build Mortgages

Journalist: Callum Mason, i

ended 05. October 2023

In today's falling property market, are mortgage lenders making it more difficult to get mortgages on new build homes, for fears that borrowers might end up in negative equity?

Are they only offering these at low LTV, charging higher interest, or flat out refusing to offer mortgages on certain new builds. And is this happening on a larger scale in recent months, because of the uncertainty regarding house prices.

4 responses from the Newspage community

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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Lenders are not making new builds more difficult recently, but it was always the case of needing a larger deposit on new builds to protect the lender. The biggest challenge has been the loss of Help to Buy helping potential buyers with deposits and being able to borrow enough for the higher-cost new build properties.
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Editor
Justin Moy
Managing Director at EHF Mortgages
The availability of New Build mortgages doesn't look to be due to lender availability, but more about lenders are assessing applications for those with smaller deposits with more scrutiny, and their surveyors will be challenged on valaution figures too. If the price is right, and affordabilty fits, we haven't seen lenders shy away from offering finance. What borrowers qualify for though is a different question entirely.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Whilst I haven't seen or experienced anything detrimental towards newly built homes from lenders, I have noticed more caution around valuations from surveyors. Interestingly I had one new build recently down valued by £20000, from £300000 to £280000, which we went back to the builder with to challenge the price or ask them to provide comparables to allow us to challenge the surveyor. To my surprise (and the client's delight) they simply accepted the £280000 valuation.
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Gary Boakes
Director at Verve Financial
Ironically, it has become easier to get mortgages on new builds recently than it has done in the past. The deposits required were always higher, we now have providers that will do 95% and 90% LTV on new build houses. New build flats are still struggling in this market with lenders reluctant to offer on a lower deposit and these have struggled since Help to buy. Lenders are now being more open on the incentives offered with the majority allowing upto 5% of the property price. Unfortunately, new builds have struggled to adapt after the help to buy finished combined with a challenging market and the lack of new housing schemes by the government. Deposit unlock was supposed to offer a new solution but has been a massive disappointment, with both builders and lenders not keen on the risk it offered and costs.