New Build Mortgages: What Makes Them Different

This guide explains how new build mortgages differ from standard property purchases, what deposit lenders typically require, how mortgage offer timelines work for off-plan and under-construction properties, and which government and developer-backed schemes can help. Whether you are a first-time buyer considering a new build or an existing homeowner moving to a newly constructed property, understanding the specific criteria and timing issues involved will help you avoid common problems.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

For a free initial consultation about new build mortgage options, call 01202 155992 or contact Mortgage One.

What Counts as a New Build

Most lenders define a new build as a property that has been built within the last two years and has never been occupied. Some lenders extend this to include properties that have been substantially renovated or converted. Off-plan purchases, where you reserve a property before construction is complete, are also treated as new builds.

New build mortgages are separate from self-build mortgages, which are designed for people building their own home. A self-build mortgage releases funds in stages as construction progresses, whereas a new build mortgage works more like a standard purchase mortgage with a single advance on completion. Mortgage One’s self-build mortgage guide explains the differences.

Why Lenders Treat New Builds Differently

Lenders apply more cautious criteria to new build properties for several reasons. New builds often carry what the industry calls a new build premium, where the property sells at a higher price than comparable existing homes simply because it is new. This premium can erode over time, meaning the property may be worth less as a second-hand sale than the original purchase price. Lenders account for this by reducing the maximum loan-to-value they will accept.

New build flats attract particular caution because they tend to be more sensitive to market fluctuations and can be harder to sell quickly. Leasehold issues, service charges, ground rent terms and the number of similar units on the same development can all affect the property’s resale value and the lender’s assessment of risk.

Deposit and Loan-to-Value Requirements

The maximum LTV available for new build properties is typically lower than for existing homes. As a general guide across the market in 2026, new build houses are available at up to 85 to 95 per cent LTV depending on the lender, while new build flats are usually capped at 75 to 85 per cent LTV.

At 95 per cent LTV, some lenders offer new build house mortgages through the government-backed Mortgage Guarantee Scheme, which was made permanent in July 2025 and covers properties valued up to £600,000. Five per cent deposit mortgages for new build flats are less widely available and may be restricted to specific lender panels or developer-backed schemes.

The deposit you need depends on the property type, lender criteria and whether you are using a government or developer scheme. As a starting point, expect to need at least 10 to 15 per cent for a new build house and 15 to 25 per cent for a new build flat. Mortgage One’s mortgage deposit guide explains how deposit size affects lender choice and the rate you are offered.

To find out what deposit you need for a specific new build property, call 01202 155992 or contact Mortgage One.

Mortgage Offer Timelines and Off-Plan Purchases

Standard mortgage offers are typically valid for six months from the date of issue. For new build purchases, many lenders offer extended validity periods of nine to twelve months to accommodate construction timescales. If you are buying off-plan, the build may not complete within the original offer period, in which case the offer may need to be extended or reissued.

An extension is not guaranteed. The lender may need to reassess your affordability, credit status and the property valuation before agreeing to extend. If your circumstances have changed or if market conditions have shifted, the extension could be declined or offered at a different rate. Starting the mortgage process early and working with a broker who understands new build timelines reduces the risk of complications.

Developer Incentives and How Lenders Treat Them

Developers often offer incentives to attract buyers. These can include contributions towards stamp duty, legal fees, furniture packages, cashback or upgrades to fixtures and fittings. While incentives can reduce your upfront costs, lenders have rules about how they are treated.

Most lenders cap acceptable developer incentives at 5 per cent of the purchase price. If the incentive exceeds this threshold, the lender may reduce the property valuation by the excess amount, which increases the effective LTV and could affect the mortgage amount available to you. All incentives must be declared to the lender and will appear on the valuation report.

Some lenders treat certain types of incentives differently. A contribution to your deposit, for example, may be treated differently from a contribution to legal fees. Your broker can explain how each lender handles the specific incentives being offered on the development you are considering.

Schemes Available for New Build Buyers

Several schemes can help reduce the deposit required or make new build properties more affordable:

•       The Mortgage Guarantee Scheme (Freedom to Buy) supports 95 per cent LTV mortgages on properties up to £600,000. It is available to first-time buyers and home movers and is now a permanent feature of the market.

•       First Homes offers eligible first-time buyers in England a discount of at least 30 per cent on new build properties, with income caps of £80,000 per year or £90,000 in London.

•       Shared ownership allows you to buy a share of a new build property, typically 10 to 75 per cent, and pay rent on the remainder. Mortgage One’s shared ownership mortgages guide explains how the mortgage works alongside the rent.

•       Deposit Unlock is a developer-backed scheme that allows buyers to purchase a new build with a 5 per cent deposit on participating developments. Availability may be limited and the scheme’s future status should be confirmed with the developer.

Mortgage One’s government mortgage schemes guide covers all current schemes in detail, including eligibility criteria and how they interact with the mortgage application.

Building Warranties and Snagging

Lenders require new build properties to be covered by an approved building warranty or structural insurance scheme. The most common is the NHBC Buildmark warranty, but other accepted schemes include Premier Guarantee, LABC Warranty and Protek. The warranty must be in place before the lender will release the mortgage advance.

A snagging survey is a separate inspection carried out by an independent surveyor to identify finishing defects and minor building issues in a new build property. While not a mortgage requirement, a snagging survey is recommended before completion to ensure any defects are recorded and addressed by the developer under the warranty.

How Mortgage One Can Help

New build mortgages involve specific LTV restrictions, extended offer timelines and developer incentive rules that do not apply to existing property purchases. As a whole of market mortgage broker, Mortgage One can identify which lenders are active on new build panels, which offer extended validity periods and which accept the incentives being offered on the development you are considering.

If you are buying through shared ownership, First Homes or Deposit Unlock, Mortgage One can ensure the mortgage application is structured to meet both the scheme’s requirements and the lender’s criteria. Mortgage One’s mortgage application guide covers the documentation and process involved.

Mortgage One’s first-time buyer mortgage guide explains the full buying process from agreement in principle through to completion, including the specific considerations for new build purchases. Mortgage One’s stamp duty calculator can help you estimate the stamp duty payable on a new build purchase.

Figures as of April 2026, London time.

For expert guidance on new build mortgages, call 01202 155992 or contact Mortgage One.

The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.

Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.

FAQs

1. Do I need a bigger deposit for a new build?

Usually, yes. Most lenders require at least 10 to 15 per cent for a new build house and 15 to 25 per cent for a new build flat. However, schemes such as the Mortgage Guarantee Scheme and Deposit Unlock can allow purchases with a 5 per cent deposit on eligible properties.

2. Why do lenders cap LTV lower on new builds?

New build properties can carry a premium over comparable existing homes, which may erode over time. Lenders reduce the maximum LTV to protect against the risk that the property’s value could fall below the outstanding mortgage balance.

3. How long is a new build mortgage offer valid?

Standard mortgage offers last six months. Many lenders offer extended validity of nine to twelve months for new build purchases to allow for construction timescales. Extensions beyond this period are not guaranteed.

4. What is the new build premium?

The new build premium is the tendency for new properties to sell at a higher price than comparable existing homes. This premium can diminish once the property is no longer new, which is one reason lenders apply stricter LTV limits.

5. How do developer incentives affect my mortgage?

Most lenders cap acceptable developer incentives at 5 per cent of the purchase price. If the incentive exceeds this, the lender may reduce the valuation, which can affect the mortgage amount available. All incentives must be declared.

6. Do I need a building warranty for a new build mortgage?

Yes. Lenders require an approved building warranty such as NHBC Buildmark, Premier Guarantee or LABC Warranty to be in place before the mortgage advance is released.

7. Can I get a buy-to-let mortgage on a new build?

Yes, but lenders may require a higher deposit, typically 20 to 25 per cent, and may impose lower maximum LTV limits on new build flats in particular. Rental income projections and stress tests still apply.

8. Should I get a snagging survey on a new build?

A snagging survey is not a mortgage requirement, but it is recommended. It identifies finishing defects and minor building issues that the developer should address under the building warranty before you move in.