Mortgages for New Build Homes in 2025

Buying a new build property is an exciting prospect — a brand-new home built to modern standards, with warranties, energy efficiency, and everything in pristine condition. However, the mortgage process for new builds comes with its own set of challenges and considerations that differ from buying an existing property. From tighter loan-to-value restrictions to time-sensitive exchange deadlines and developer incentive schemes, there is a lot to be aware of. In this guide, we cover everything you need to know about securing a mortgage on a new build home in the UK.

How Are New Build Mortgages Different?

While the fundamental principles of a mortgage remain the same regardless of whether you are buying a new build or an existing property, several factors make the process different:

Higher deposit requirements — many lenders impose tighter loan-to-value (LTV) restrictions on new build properties. While you can typically get a mortgage with a 5% deposit on an existing property, some lenders require 10%, 15%, or even 20% for a new build. This is because new builds can be subject to price fluctuations in the early years (sometimes decreasing in value shortly after completion, similar to buying a new car), which increases the lender’s risk.

Valuation concerns — lenders commission an independent valuation to confirm the property’s market value. With new builds, the surveyor is assessing a property that may not yet be completed, and they must determine whether the asking price reflects genuine market value rather than an inflated developer price. If the valuation comes back lower than the purchase price (a down-valuation), you will either need to find additional deposit funds to cover the shortfall or renegotiate the price with the developer.

Exchange deadlines — developers typically require buyers to exchange contracts within 28 days of reserving a plot, though this can vary. This puts significant time pressure on the mortgage application process. Your mortgage offer must be in place before exchange, and many lenders need several weeks to process an application. Having a mortgage in principle and working with an experienced broker can help ensure your application progresses quickly enough to meet the deadline.

Build stage considerations — if the property is not yet built or is under construction, there are additional factors to consider. Mortgage offers typically last three to six months, and if construction delays push the completion date beyond your offer’s expiry, you may need to reapply. Some lenders offer extended mortgage offers (up to nine or twelve months) specifically for new builds, which provides more breathing room.

LTV Restrictions on New Build Properties

Understanding how different lenders approach LTV on new builds is crucial to your planning:

Flats — new build flats typically have the strictest LTV restrictions. Many mainstream lenders cap lending at 75% to 80% LTV for new build flats, meaning you need a deposit of 20% to 25%. This is because new build flats, particularly in high-density developments, can be more susceptible to value fluctuations.

Houses — new build houses generally attract more favourable LTV limits, with many lenders willing to go up to 85% or 90% LTV. Some lenders will even offer 95% LTV on new build houses from approved developers, though the criteria may be stricter.

Lender variation — LTV limits vary significantly between lenders, and some are much more accommodating for new builds than others. Specialist new build lenders and building societies may offer more competitive terms. This is an area where whole-of-market broker advice is particularly valuable, as the right lender can make a substantial difference to your required deposit.

Use our affordability calculator to understand how much you might be able to borrow, and our mortgage calculator to see how different deposit levels affect your monthly payments.

Developer Incentives and How They Affect Your Mortgage

Property developers frequently offer incentives to attract buyers. These can include:

• Gifted deposits — the developer contributes towards or covers the entire deposit
• Cashback on completion — a cash payment made to the buyer after completion
• Stamp duty contributions — the developer pays some or all of the stamp duty
• Free upgrades — upgraded kitchen appliances, flooring, or fixtures included in the price
• Part-exchange — the developer purchases your existing property at an agreed price, removing the need to sell on the open market

While these incentives can be very attractive, they have implications for your mortgage:

Lender caps on incentives — most lenders cap the total value of incentives a buyer can receive, typically at 5% of the property value for purchases at up to 85% LTV. If incentives exceed the lender’s cap, they may reduce the property’s valuation by the excess amount, effectively requiring you to increase your deposit. Incentive caps can be lower (sometimes 0%) for higher LTV purchases.

Gifted deposits and valuation — if the developer is gifting the deposit, lenders may view this differently from a genuine cash deposit. Some lenders do not accept developer-gifted deposits at all, while others may treat the full purchase price as the property’s value and lend against it. The treatment varies, so broker advice is essential.

Price inflation concerns — lenders are aware that developers may inflate the asking price to absorb the cost of incentives. If a property is listed at £300,000 with £15,000 of incentives, the surveyor may value it at £285,000 (the net effective price). This would mean you need a larger deposit to maintain the same LTV ratio.

Transparency — all incentives must be disclosed to the lender as part of the application process. Failing to declare incentives is mortgage fraud and can result in the lender withdrawing the mortgage offer and potentially blacklisting you.

Stamp Duty on New Build Properties

Stamp duty land tax applies to new build properties in the same way as existing properties. The current standard rates in England are:

• 0% on the first £125,000
• 2% on £125,001 to £250,000
• 5% on £250,001 to £925,000
• 10% on £925,001 to £1,500,000
• 12% on any amount above £1,500,000

First-time buyer relief — if you are a first-time buyer purchasing a new build as your first home, you benefit from the enhanced nil-rate threshold of £300,000, with 5% payable on the portion between £300,001 and £500,000. No relief is available if the property price exceeds £500,000.

Additional property surcharge — if you already own another property (and are not replacing your main residence), the 5% additional property surcharge applies on top of the standard rates. This can add significantly to your purchase costs, particularly on higher-value new builds.

You can calculate your exact stamp duty liability using our stamp duty calculator.

The New Build Warranty and Lender Requirements

Most lenders require a new build property to have an approved structural warranty before they will lend against it. The most commonly accepted warranties include:

• NHBC (National House Building Council) Buildmark — the most widely recognised warranty, providing 10 years of cover
• Premier Guarantee — another widely accepted 10-year structural warranty
• LABC Warranty — provided by Local Authority Building Control
• Zurich — structural warranty offering 10-year cover
• Checkmate — accepted by many lenders for converted and newly built properties

The warranty typically provides two years of defect cover (during which the developer must fix any problems with the build quality) followed by eight years of structural insurance cover. Some lenders are more restrictive about which warranty providers they accept, so it is worth checking early in the process.

If the property is a conversion rather than a new build (for example, a warehouse converted into flats), different warranty requirements may apply. Some lenders are more cautious about conversions, particularly if the building is listed or has an unusual construction type.

Buying Off-Plan: Additional Considerations

Buying off-plan means purchasing a property before it has been completed, often before construction has even begun. While this can offer advantages (such as choosing finishes or securing a desirable plot), it adds complexity to the mortgage process:

Extended timescales — completion may be 12 to 24 months or more from the date of reservation. Your mortgage offer may expire before the property is ready, requiring you to reapply. Interest rates and lending criteria may change during this period, potentially affecting your borrowing capacity.

Extended mortgage offers — some lenders offer mortgage terms that remain valid for up to 9 or 12 months, specifically for off-plan purchases. These products provide more certainty but may be slightly more expensive than standard offers.

Staged payments — in some off-plan developments, particularly with smaller or independent developers, you may be asked to make staged payments during construction. This is less common with large national housebuilders but is worth clarifying before you commit.

Specification changes — the finished property may differ from the initial plans or show-home specifications. Your contract should specify what is and is not included, and any material changes may need to be reported to the lender.

Market risk — if property values decrease between reservation and completion, you could complete on a property worth less than you are paying for it. This is a particular risk in a falling market and is worth considering carefully before committing to an off-plan purchase.

Finding the Right Lender for a New Build Mortgage

Not all lenders are equally comfortable with new build properties, and their criteria can vary significantly. Here are the key factors to consider when choosing a lender:

• LTV limits — does the lender offer the LTV you need for a new build flat or house?
• Incentive policy — how does the lender treat developer incentives, and what is their cap?
• Offer validity — how long is the mortgage offer valid, and can it be extended if there are construction delays?
• Valuation approach — how does the lender’s surveyor typically approach new build valuations in the area?
• Processing speed — can the lender meet the developer’s exchange deadline?
• Approved developers — some lenders have lists of approved developers or approved warranty providers

Working with a whole-of-market broker gives you access to lenders across the entire market, including those with specialist new build expertise. At Option Finance, we regularly help buyers navigate the new build mortgage process and can identify the most suitable lender for your specific development and circumstances.

Whether you are a first-time buyer purchasing your first new build, moving home to a new development, or considering a new build as a buy-to-let investment, having the right guidance makes the process significantly smoother. We also help buyers with adverse credit, self-employed income, and those exploring commercial property options.

You can model different mortgage scenarios using our repayment calculator and explore remortgage options for the future with our remortgage calculator.

One of the genuine advantages of buying a new build is energy efficiency. New build homes in England must meet current Building Regulations Part L standards, which require high levels of insulation, double or triple glazing, energy-efficient heating systems, and low air permeability. Many new builds achieve EPC ratings of A or B, compared to the C or D rating typical of older properties.

This translates into lower energy bills, which is not only good for your wallet but also increasingly relevant for mortgage purposes. Some lenders offer green mortgage products with preferential rates for properties with high EPC ratings, and as energy efficiency regulations tighten, new builds are well positioned to retain their value.

From a mortgage affordability perspective, lower running costs can indirectly help your application, as some lenders factor utility costs into their affordability models. Additionally, if you plan to let the property in future as a buy-to-let investment, a high EPC rating is a legal requirement (minimum E rating) and a selling point for tenants who want to minimise their energy costs.

Get Started With Your New Build Mortgage

The new build mortgage process has extra moving parts compared to buying an existing property, and timing is critical. Starting your mortgage application early, working with an experienced broker, and understanding the specific requirements for new builds will put you in the strongest possible position.

At Option Finance, our advisers specialise in helping buyers secure the right mortgage for new build properties across the UK. We handle everything from identifying the most suitable lender to coordinating with developers and solicitors to ensure your purchase completes on time.

Apply now to speak with one of our new build mortgage specialists and take the first step towards your brand-new home.