How to buy a house Buying a new-build home
There are many reasons why you may be thinking about buying a new-build property, but there are also a few things you should take into consideration as well.
Getting a mortgage for a new-build home
Most mortgage lenders will consider lending on new-build houses but some won't lend on new-build flats. The maximum proportion of the property's value you can borrow (the loan-to-value) may be lower than for a second-hand property.
The first time buyer rates table and moving home rates table from Which? Mortgage Advisers show what the best deals on the market are. You can also use the Which? Mortgage Advisers' How much can I borrow? calculator to figure out the size of mortgage you are likely to be able to get.
If you are looking for advice, the Which? Group offers an independent mortgage advice service that looks at every mortgage from every available lender. You can also find an independent mortgage adviser using Unbiased.co.uk.
New-build home advantages
- Major repairs and redecoration should be unnecessary for the first few years.
- If the property is registered with the National House-Building Council (NHBC), it’ll come with a 10-year warranty and protection scheme. Find out more on the NHBC website. There are also other companies that provide warranties and insurance for new homes, such as BLP's building defects insurance.
- The deposit required may be small.
- If the house is not yet built or not yet completed, you may be able to get some features changed to suit your requirements, such as the position of a door, sockets or cupboards. However, you will have to pay extra for this and the builder may not agree to undertake any variations until after contracts are exchanged.
- It may be easier to get a mortgage. Many builders arrange mortgage facilities for a whole estate in advance. There is often a link between the property developer and a particular building society, which makes it possible to get a loan of a high percentage of the purchase price.
New-build home disadvantages
- The house might not be finished for some time. You can try to get the builder to agree a ‘long stop’ completion date which means he'll be liable to pay you compensation if he doesn't finish the work by that date.
- There might be nothing more than the site and the plan to show to solicitors and mortgage lenders.
- Most mortgage lenders won’t release the final loan until all the work is completed.
- There are often teething troubles, such as cracks produced by dried out plaster.
- The roads on an estate might not be finished which may cause problems with a building society’s loan.
- The garden might have to be laid and planted. There may be restrictions on what you can do to the front garden.
- Even in a rising property market you may not get your money back if you have to sell within a year or two.
- You may be required to pay for the new home by stage payments and therefore find yourself borrowing to pay for two houses at once.