New build home mortgages

What is a new build property?

When you hear ‘new build property’, you probably think of a home that has recently been developed and has never been lived in before. However, some lenders also consider a property ‘new build’ if it's less than a few years old or if an existing property has been extensively renovated. New build properties are typically part of larger developments, but can also refer to smaller, individual projects. 

The property may be bought ‘off-plan’ which means it hasn’t even been built when you commit to buying it. It’s pretty cool to imagine stepping foot into a home that’s never been lived in before, allowing you to put your own stamp on it straightaway. But it’s also important not to get swept up in the dream. There are pros and cons to buying all sorts of different properties and a new build is no different.

Did you know? According to the latest Office for National Statistics data, the average price for a newly built home in England and Wales is £349,995.

Are new build properties popular?

Buying an existing house is still far more common than choosing a new build home. According to our own data, just 4.5% of home buyers in the last twelve months were looking for a mortgage to buy a new build property. 

However, with the UK government committed to building 1.5 million new homes by 2029, it’s likely we’ll see more homebuyers considering new builds in the future.

Advantages and disadvantages of a new build home

• Brand new condition. You’ll be the first person to live in your new home, which is very exciting. It also means you don’t have to worry about any pricey renovations or repairs for a good while yet. 

• Incentives and perks. Developers may offer incentives like deposit contributions, paying your stamp duty or offering free upgrades to help seal the deal. 

• Developer warranty. New builds usually come with a 10 year warranty from the National House Building Council (NHBC) which provides cover for certain defects. This provides peace of mind that, if something isn’t quite right, you won’t be left footing the bill. 

• Modern features. New builds adhere to the latest building regulations, which means your new home is bang up-to-date. It’ll also be kitted out with modern fixtures and fittings. 

• Energy efficient. Your home is likely to have the latest energy-efficient systems, potentially leading to lower utility bills.

• Make your house a home. If you’re buying off-plan, you may have the opportunity to choose fixtures and fittings (such as carpets, kitchen cupboards, bathroom tiles and more) to match your personal style. 

• Chain free. Buying a new build can simplify a property chain or, if you’re a first-time buyer, eliminates the chain altogether. This can really de-stress the home buying or moving process.

• Government schemes available. You may be eligible for additional support to help you get on the property ladder, such as the First Homes scheme in England. 

• Premium price. New builds may well be priced higher than other existing properties in the area, as you’ll be paying the “new build premium” for the privilege of it being brand spanking new. 

• Construction delays. Developments can be complex, and it can be frustrating to have to wait a while for your home to be completed. 

• Snagging issues. Though everything is new, things can still go wrong. And dealing with defects can be a hassle - even if it’s just a few cosmetic niggles. 

• Smaller plot sizes. New builds may offer smaller rooms or gardens compared to older properties in the same price range. You might also find the layout of your home or the room shape slightly non-conventional compared to older properties. 

• Building work continues. Some larger developments can take years to complete so, if you’re one of the first to move in, you could be stuck living on a building site for a little while. 

• Price depreciation. New builds can go down in value after their first few years, which could be an issue if you plan to move home soon. But over the long-term it’s likely their value will appreciate in the same way older homes do.

• Extra charges. You’ll need to pay a reservation fee to secure the property, which you’ll lose if you don’t go through with the house purchase. You could also face service charges (also known as estate management fees) for the upkeep of communal areas. It’s worth being aware of these annual costs before signing on the dotted line, as your lender will want to know what you’ve committed to.

• There’s a first for everything. As you’re the first person to live in the property, you’ll be the first person to set things up like utilities, broadband and even postal deliveries. This can often feel like a slog, particularly when you just want to bask in that ‘new home’ feeling. 

What else should I consider before buying a new build?

The mortgage process is fundamentally the same when buying a new build. Lenders will still assess your financial situation (such as your income, outgoings and credit history) as they would for any other property purchase. However, there are some extra things to take into consideration:

• Stricter lender criteria. Some mortgage lenders have specific criteria regarding new build properties as they often consider them riskier. That’s because the value of the property is likely to fall in the first few years once it’s no longer brand new. Having a broker on hand can be invaluable as they can help you to cut through the jargon and understand what lenders are looking for.

• Valuation challenges. It can be tricky for lenders to value a property that hasn’t been built yet. Different lenders may use different methods of valuation, but they often rely on the developer’s plans, quality of other builds on the development and comparable properties to estimate its worth. 

• Longer completion times. There can be a longer period of time between reserving your new home and completing on it. Sometimes a mortgage offer can expire within this time, and you may end up needing to extend or even reapply for the mortgage. This can be problematic if your financial circumstances have changed in between, as your mortgage offer may change (or your application could be rejected altogether - though this is unlikely) 

• Developer incentives. Some developers offer incentives like deposit contributions or even mortgage assistance. It’s important you make sure your lender knows about any incentives you’re receiving, as this could affect your mortgage. If the lender decides to knock off some of the incentive value off the purchase price this could impact your loan-to-value and potentially even the rates offered. It could be a good idea to seek out non-cash incentives, such as upgraded fixtures or fittings, as this may not affect your mortgage application.

What deposit will I need for a new build mortgage?

Just like any type of mortgage, the deposit required can vary depending on the lender and the type of property you want to buy (i.e. whether you’re buying a new build home or a flat). This is usually 10% to 25% of the purchase price.

5% deposit mortgages for new builds are available -  though they’re much tougher to find (you should also expect higher interest rates and stricter eligibility criteria). It’s worth noting that most lenders won’t allow you to use the Mortgage Guarantee Scheme on a new build property, though the Deposit Unlock scheme may be worth looking into. 

Typically speaking, the higher your deposit, the more competitive rates available. That’s because lenders usually reserve their best interest rates for lower loan-to-value mortgages (how much you want to borrow compared to the value of the property).

*All data shown is from Mojo Mortgages' own customer records, looking at the period from 7 May 2024 to 6 May 2025.