New Build Mortgage
What You Need to Know Before You Buy
Buying a newly built home is exciting — but the mortgage process works a little differently to purchasing an older property, and it catches many buyers off guard. From shorter offer windows to stricter LTV limits, understanding how new build mortgages work before you reserve a plot can save you significant stress and money.
How does a new build mortgage work?A new build mortgage works like a standard residential mortgage, but with a few important differences. Lenders often apply lower maximum loan-to-value ratios (LTV — the percentage of the property's value you can borrow) on new builds, and mortgage offers typically need to last longer to cover construction delays, which not all lenders accommodate. Getting a mortgage agreed in principle before you reserve a plot is strongly recommended, as builders usually require a reservation fee and a set exchange deadline.
Why is getting a mortgage on a new build different?
When you buy an existing property, the building is already there for a surveyor to inspect and a lender to value. With a new build, you're often committing to purchase a home that hasn't been completed yet — sometimes one that hasn't even broken ground. That introduces uncertainties lenders price into their criteria.
Loan-to-value (LTV) limits are often tighter
LTV — the proportion of the purchase price you're borrowing — is a key figure in any mortgage application. On a standard residential purchase, some lenders will lend up to 95% LTV, meaning you only need a 5% deposit. For new build houses, many lenders apply a maximum of 85–90% LTV, and for new build flats, the cap is frequently 75–85% LTV. This means you may need a larger deposit than you'd expect if you're buying a flat in a new development.
That said, a number of lenders do offer 95% LTV mortgages on new build houses, and some government-backed schemes have historically helped buyers with smaller deposits — it's worth discussing your deposit size with a broker early, before you fall in love with a particular plot.
Mortgage offer validity and construction delays
A standard mortgage offer is typically valid for six months. If your new build is delayed — which is not uncommon — you may find your offer expires before completion. Some lenders offer extended validity periods of nine or twelve months specifically for new builds, but not all do. Knowing which lenders will accommodate this before you apply could be the difference between a smooth completion and having to reapply from scratch under potentially different market conditions.
Builder incentives can affect how much you can borrow
Developers often offer incentives to attract buyers — cashback, upgraded fixtures, paid stamp duty, or contributions to your deposit. While these can be genuinely useful, lenders treat them carefully. Many will accept builder incentives up to around 5% of the purchase price, but anything above that may require the surveyor to reduce the valuation figure used for mortgage purposes. This can unexpectedly reduce the amount you're able to borrow, so always check with your broker before accepting any incentive package.
What deposit do you need for a new build mortgage?
For a new build house, you may be able to access deals from as little as a 5% deposit, though the range of lenders willing to lend at that level is narrower than for older properties, and the interest rates available at higher LTVs tend to be less competitive. For new build flats, most lenders want to see at least 15–25% deposit, and at the higher end of that range, you'll unlock significantly better rates and a wider pool of lenders.
If you're a first-time buyer, it's worth knowing that some lenders have specific products designed around new build purchases, and the criteria — including how they treat gifted deposits from family members — can vary considerably. For example, some lenders will accept a cash gift from a family member (including a partner you cohabit with) as part or all of your deposit, while others have stricter rules around the source of funds. A broker can help you identify which lenders are most likely to accept your specific deposit situation.
Can you get a new build buy-to-let mortgage?
Yes, though the criteria differ from a residential purchase. New build buy-to-let mortgages — where the property is purchased as an investment to rent out — are typically assessed on the rental income the property can generate relative to the mortgage payment. Most lenders require at least a 25% deposit on buy-to-let new builds. It's also worth noting that most buy-to-let mortgages are not regulated by the Financial Conduct Authority (FCA), so the protections that apply to your residential mortgage may not apply here. You can read more about the buy-to-let process on our buy-to-let mortgages page.
Reserving a plot without a mortgage agreed in principle is one of the most common — and costly — mistakes new build buyers make. The builder's exchange deadline won't wait for your application to catch up.
What about new build shared ownership?
Shared ownership is a purchasing arrangement where you buy a share of a property (typically between 25% and 75%) and pay rent on the remaining share to a housing association. Many new build developments offer shared ownership options, and some lenders have products specifically designed for this arrangement. The mortgage is only taken out on the share you're purchasing, which can make the numbers more accessible — but the criteria, particularly around the lease and the housing association's terms, can be complex. A broker familiar with shared ownership new builds can help you navigate the additional layers of paperwork involved.
How long does the new build mortgage process take?
The timeline varies, but as a rough guide: getting an agreement in principle (AiP — a preliminary indication from a lender that they'd be willing to lend, based on an initial assessment) can be done in a matter of hours to a couple of days. A full mortgage application, once submitted, typically receives a formal offer within two to four weeks, though more complex cases can take longer.
The key with new builds is that you often need to move quickly at reservation stage — developers frequently require a reservation fee and a fixed date for exchange of contracts. Having your mortgage arranged before you start viewing plots puts you in a much stronger position and avoids the frustration of rushing an application under pressure.
What happens if the build is delayed and my mortgage offer expires?
Construction delays are one of the most common sources of stress for new build buyers. If your mortgage offer expires before completion, you'll need to apply for an extension or submit a new application entirely. Some lenders offer free extensions of three to six months for new builds; others treat it as a fresh application, which means a new credit check, new affordability assessment, and potentially a different interest rate if the market has moved.
The practical answer is to choose a lender with a track record of accommodating new build extensions at the outset, rather than hoping your original lender will be cooperative later. This is exactly the kind of lender intelligence that a broker holds — you'd have to contact every lender individually to gather it yourself.
Why use a broker for a new build mortgage?
The new build mortgage market is genuinely more complex than buying an established property. Lender policies on LTV limits, offer validity, builder incentives, and construction delays differ significantly — and those differences matter in practice. A broker who regularly handles new build purchases will already know which lenders are flexible on offer extensions, which accept higher-LTV applications on new build flats, and which are likely to be straightforward about gifted deposits.
At Greywood Financial, we work regularly with clients purchasing new build properties across both residential and buy-to-let arrangements, and we're familiar with the particular pressures that come with builder-imposed exchange deadlines and phased construction timelines. Rather than applying to a lender that looks suitable on paper and discovering a policy problem mid-application, we can match your situation to lender criteria before anything is submitted — saving time, protecting your credit file, and reducing the chance of an offer expiring before your keys are ready.
If you're at the start of your new build journey, the best time to speak to us is before you visit the show home — not after you've already paid a reservation fee.
Reserving a new build soon?
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Frequently Asked Questions
Can I get a 5% deposit mortgage on a new build?
Yes, some lenders offer new build mortgages at 95% LTV (meaning a 5% deposit) for houses, though the number of lenders willing to do this is smaller than for older properties and the rates are generally less competitive. For new build flats, most lenders require at least a 15% deposit. Your eligibility will depend on your income, credit history, and the specific lender's criteria.
What happens if my new build is delayed and my mortgage offer expires?
If your mortgage offer expires before your new build completes, you'll need either an extension from your existing lender or a fresh application. Some lenders offer extensions of three to six months for new builds at no extra cost; others treat it as a new application, which could mean a new credit check and a different interest rate. Choosing a lender with a clear extension policy at the outset is the safest approach.
Do builder incentives affect my new build mortgage?
Yes — lenders factor builder incentives (such as cashback, stamp duty contributions, or free upgrades) into their affordability and valuation calculations. Most lenders accept incentives up to around 5% of the purchase price, but anything above that threshold may result in the surveyor reducing the valuation used for mortgage purposes, which can lower the amount you're able to borrow.
Is a new build mortgage harder to get than a normal mortgage?
Not harder in terms of the income and credit checks — those work the same way — but new build mortgages have additional complexities around LTV limits, offer validity periods, and how builder incentives are treated. The pool of lenders who actively accommodate new builds is also narrower, which is why using a broker who knows the new build market can make a meaningful practical difference.
Can I use a gifted deposit from a family member for a new build mortgage?
Many lenders will accept a gifted deposit from a family member — typically a parent, sibling, grandparent, or co-habiting partner — for a new build purchase. The lender will usually require a signed gifted deposit letter confirming the money is a gift and not a loan, and the source of the funds may need to be evidenced. Exact rules vary by lender, so it's worth confirming this before you apply.
Buying a new build is one of the more involved mortgage scenarios you can encounter, but with the right preparation it doesn't need to be stressful. Getting your mortgage arranged early, understanding the deposit and LTV requirements for your specific property type, and working with a broker who knows the new build landscape puts you in the strongest possible position — from reservation right through to the day you collect your keys.
Your home may be repossessed if you do not keep up repayments on your mortgage. Greywood Financial Ltd is an Appointed Representative of PRIMIS Mortgage Network, a trading name of Advance Mortgage Funding Ltd. Advance Mortgage Funding Ltd is authorised and regulated by the Financial Conduct Authority. The guidance contained within this article is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK. Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority. Greywood Financial Ltd is registered in England and Wales, Company No: 12713768. Registered Office: 124 City Road, London, EC1V 2NX.
