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New-build homes mortgages: everything you need to know

Ready to buy a brand new, sparkly home? Securing a mortgage for a new-build is similar to buying a more traditional home, but there are a couple of differences. Here’s how it works.

Guest Author
Words by: Matilda Battersby


What is a new-build property?

A new-build home is a property that’s been constructed within the past two years that no one has lived in yet.

New-build homes can be bought ‘off-plan’, which means the developer is selling them before the construction work has begun or finished, or as a completed home.

A home that’s recently been renovated to such an extent that a whole new dwelling has been created can also qualify as a new-build home.

Securing a mortgage for a new-build home is largely the same as getting one for a more traditional home, but there can be small differences in the process, especially if you’re buying off-plan. 

Let’s go through the essentials.

The benefits of buying a new-build home

Apart from the obvious joys of knowing that you are the first people to sleep, eat, work-from-home and enjoy living in your new home, buying brand new also has other practical advantages.

Let’s take a quick look before we get into the mortgage stuff.

Style and interior design

If you’re buying off-plan, the developer will often involve you in decisions about the build, from the layout options to the style of kitchen and bathroom fittings.

You might choose the finishing colours and materials used, or make decisions on the types of windows, doors and flooring installed to truly personalise your living space.


As if bagging your dream home complete with your perfect kitchen isn’t enough, new-builds also come with warranties. So any problems that crop up are usually covered.

You won’t have to fork out for any major structural repairs for 10 years, thanks to protections offered as standard under the The Consumer Code for Home Builders.

New-build warranties: everything you need to know

Energy efficiency

New-builds also offer higher efficiency, with 80% having an EPC rating of A or B, making them much cheaper to run and kinder to the planet.

Why buying a new-build home could save you money

Chain free

There are no complicated chains involved in your purchase. And if you’re a first-time buyer, that means you aren’t relying on anyone else (other than the developer) for the purchase to go ahead.

What’s different about mortgages for new-builds?

Mortgages for new-builds aren’t wildly different to mortgages for traditional homes, but there are a few things it’s good for buyers to know in advance.

New-build mortgage criteria

With any mortgage, the lender will look carefully at the financial situation of the person or people taking out a loan.

With a new-build mortgage, the lending criteria can sometimes be stricter, meaning you may need to save up a larger deposit.

Mortgages are offered on the basis of income multiples (usually up to a maximum of 5X your salary, for example).

Lenders will also look into your financial commitments (what you spend each month, any dependents you may have and your credit score) to work out what they can offer you.

As with any mortgage, getting into the best financial shape before applying can help.

Look at high street mortgage lenders but also talk to a mortgage broker about your options.

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Deposits for new-build mortgages

Just like any other mortgage, new-build mortgages are offered on an agreed loan-to-value ratio. 

This means you’ll need to save a percentage of the value of the home you’re buying as a deposit.

The rule of thumb for lenders is the larger the deposit, the lower the rate of interest you’ll be charged on your mortgage.

For new-build homes, mortgage lenders are likely to specify a loan-to-value ratio. 

A typical loan-to-value ratio for a new-build house is 85%, so you’ll need to save up 15% of the value of your home for a deposit.

Some lenders will offer a lower loan-to-value on new-build apartments. For example 75%, meaning you need to save up 25% of the value for a deposit.

That said, the Mortgage Guarantee Scheme is still in place, which enables buyers to borrow up to 95% of the total value of their home, so you may only need to save a 5% deposit.

What is the Mortgage Guarantee Scheme?

And mortgages with smaller deposits are also available for new-build homes via schemes like Deposit Unlock.

What is Deposit Unlock?

If you're buying a home through Shared Ownership, you only need a mortgage for the share of the property you're buying, which means you won't need to save for such a large deposit.

Shared Ownership: everything you need to know

The timeline for securing a new-build mortgage

Timing is critical for any mortgage offer and most are valid for six months.

If you’re buying a home off-plan, it’s worth checking that the mortgage offer can be extended in case there are any unforeseen delays down the line.

Lenders often have processes in place for extending mortgage offers, so just make sure you check the small print and discuss any potential scenarios with your lender or broker.

For most new-builds you pay a reservation fee, then you have 28 days to secure your mortgage and exchange contracts.

If your mortgage is straightforward, you should be able to secure it in plenty of time and move into your new home at record speed.

Buying schemes for new-build mortgages

Deposit Unlock

Deposit Unlock enables first-time buyers and second-steppers to buy a new-build home with just a 5% deposit.

Major house builders from Barratt to Vistry are taking part in the scheme, which is available for new-build houses or two bedroom+ apartments.

Find out more about Deposit Unlock

Find a home with Deposit Unlock

Find a new-build home with just a 5% deposit using Deposit Unlock, while benefitting from a competitive mortgage rate.

Shared Ownership

With Shared Ownership, you only pay the deposit on - and need a mortgage for - the share of the property you're buying.

That means the amount of money you’ll need to borrow is a lot lower than it would be if you were buying the whole property outright.

The share you buy is usually between 25% and 75% of the total property, but with some homes, it can be as little as 10%.

You pay a mortgage on the share you own, and reduced rent on the portion you don’t own.

That part is usually owned by a housing association, private developer or local authority.

As time goes on, you can increase your share in the property by buying more of it in increments, until you own all of it outright or are ready to sell it. 

Find out more about Shared Ownership

Looking for a Shared Ownership home?

We've got thousands to choose from. Simply filter your search by area, number of bedrooms, price and property type.

Help to Build

The Help to Build Equity Loan Scheme is a government initiative designed to financially support self-builders who want to create their own homes.

You’ll need to put down a 5% deposit and get a self-build mortgage, which the government tops up with an equity loan of up to 20%, rising to 40% in London. 

Find out more about Help to Build

The process of securing a new-build mortgage

  1. Save up as big a deposit as you can

  2. Use a mortgage calculator and contact a high street lender or mortgage broker to see how much you might be able to borrow

  3. When speaking to lenders, make sure you explain that you’re looking for a new-build property and if you’re buying off-plan

  4. Search new-build homes to see what’s available in your area

  5. Decide if you’re using a scheme like Deposit Unlock or Shared Ownership as this will help you understand how much you need to borrow

  6. Once you’ve made a decision make an offer on your new home, appoint a conveyancer (that’s a lawyer who knows all about homebuying)

  7. Once you have paid your reservation fee, you can officially apply for your mortgage, which will need to be secured within 28 days so you can exchange contracts

  8. Use a mortgage broker or approach high street lenders to find the best deals

  9. The lender will carry out a valuation survey on the home before the mortgage is offered

  10. You can then exchange, paying your deposit and set a date for completion.

Mortgage calculator

Work out what your monthly mortgage payments could be with our mortgage calculator.

We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zoopla Property Group accepts no responsibility or liability for any decisions you make based on the information provided.