If you're a first-time buyer looking at new builds, you're probably wondering:
What deposit do I need?
Which schemes can I use?
Will I really save money buying new?
This guide has the answers.
Why Choose a New Build?
New builds offer unique advantages for first-time buyers:
- Modern energy efficiency – Lower heating bills and carbon footprint
- No hidden structural issues – Everything is new and under warranty
- Often located in growing areas – Potential for property appreciation
- First-time buyer support schemes – Government backing for new build mortgages
What Deposit Do You Need?
Like any property purchase, deposit requirements depend on:
- 5% deposit mortgages – Available, but often limited
- 10% deposit mortgages – More commonly available, better rates
- 15-20% deposit – Opens up the best mortgage rates
The advantage of new builds is that some developers offer schemes where they contribute toward your deposit, effectively giving you access to lower-deposit mortgages.
Government Schemes: Help for New Build Buyers
Shared Ownership (Shared Equity)
Buy a share (typically 25-75%) of a new build property, with a housing association owning the rest. You pay a small rent on the unowned portion and can "staircase" (buy more shares) over time.
Advantages:
- Lower deposit needed (usually 5% of your share)
- Lower mortgage amount
- Smaller monthly payments
- Flexibility to buy more shares later
Right to Buy
If you're eligible through a housing association, you may be able to purchase the property at a discount. This doesn't apply to all new builds, so check first.
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Mortgage Lenders and New Builds
Do All Lenders Accept New Builds?
Most mainstream lenders accept new builds, but some have specific requirements:
- NHBC Warranty: Many lenders require the property to be NHBC-registered (provides structural warranty)
- Completion Status: Some lenders have specific requirements about when a new build must be completed
- Specification: Some lenders avoid properties under a certain size or specification
What to Ask When Viewing New Builds
New Build vs. Resale Mortgage Considerations
One key difference: New builds often have ground rent and service charges, which can affect affordability. Lenders factor these in when calculating how much you can borrow.
Example:
If a property has:
- £500 mortgage payment
- £150 ground rent
- £200 service charge
- £100 council tax
Your total monthly housing cost is £950, not just £500.
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Conveyancing and Timeline
Buying a new build follows a slightly different timeline:
Step 1: Reserve the Property
You'll typically pay a reservation fee (often refundable if the builder goes into administration).
Step 2: Mortgage Application
Even though the property isn't finished, you can apply for a mortgage. The lender will value based on specification and market comparable.
Step 3: Completion
This happens when the property is finished. The developer and your solicitor coordinate the handover.
Step 4: Final Inspection
Always inspect the property before completion to ensure everything is as specified.
Final Thoughts: New Builds Can Be Great for First-Time Buyers
New builds offer stability, warranty, and often come with schemes designed to help first-time buyers. While there are some specific considerations (NHBC warranty, ground rent, service charges), they can be excellent entry points to the property market.
With the right preparation and understanding of how new builds differ from traditional properties, you can find the perfect new build to launch your property ownership journey.
📞 Ready to explore new build options? Call 01323 364432
📧 Email info@quanstromfinancial.co.uk
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