Mortgages for new build flats can be a bit different from those for older properties. Here’s a breakdown of what you might need to consider:
1. Deposit Requirements
- Higher Deposits: Lenders often require a higher deposit for new build properties, usually around 10% to 25% of the property’s value.
- Help to Buy Scheme: In the UK, there was the Help to Buy Equity Loan scheme, which allowed buyers to put down a lower deposit. While this scheme has ended for new applications, other government schemes might be available.
2. Valuation and Survey
- Valuation: Lenders may have stricter criteria for valuing new build properties. An independent valuation will assess the property’s worth.
- Survey: A survey may be necessary to ensure the property meets building regulations and is free from defects.
3. Developer Incentives
- Incentives: Developers sometimes offer incentives like covering stamp duty or legal fees, but these can sometimes affect the mortgage terms.
- Impact on Mortgage: Lenders may scrutinize these incentives to ensure they don’t artificially inflate the property’s value.
4. Property Management
- Service Charges: New build flats often come with service charges for maintenance of communal areas. Lenders will consider these charges when assessing affordability.
- Ground Rent: Be aware of any ground rent agreements, as high ground rents can affect the property’s value and mortgage terms.
5. Leasehold vs. Freehold
- Leasehold: Most new build flats are sold as leasehold, which can have implications for mortgage approval. Lenders will look at the length of the lease and any potential issues with lease terms.
- Freehold: If available, a freehold property might be easier to mortgage, but new build flats are often leasehold.
6. Developer Reputation
- Developer Track Record: Lenders might look at the reputation of the developer. Properties from well-known developers might be easier to finance.
7. Completion Dates
- Completion Risks: If you’re buying off-plan, lenders may be cautious about the completion date and any potential delays in the construction.
8. Government Schemes
- First Homes Scheme: Look out for any new government schemes that might help with the purchase of new build properties.
Tips for Securing a Mortgage
- Get Pre-Approved: Before you start shopping for new build flats, get a mortgage pre-approval to understand what you can afford.
- Research Lenders: Different lenders have different policies regarding new builds. It might be beneficial to work with a mortgage broker who has experience with new build properties.
- Understand Terms: Ensure you understand all the terms of your mortgage, including any conditions related to the new build status.