New build mortgages
The allures of a newly built property are clear:
- Your thee first to step inside and make it your own
- You have input into its décor
- More modern design idea
- More stringent safety and building regulations
- A warranty
- Builder paid deposits
- Property suitable for modern appliances.
When it comes to new build mortgages, there are a number of options available to you.
Property developers are often keen to sell quickly for many reasons (largely paying the bank back for their development loan) and as such will offer attractive incentives to potential buyers.
Builder Paid Deposits
A common incentive is a builder paid deposit, where the builder will contribute or pay the entire deposit for you. For first time buyers or those who are struggling to get a deposit together this can be extremely useful, however not all lenders will accept builders deposits and many will value the property less this deposit amount.
Are The Furnishings Valued?
When buying a furnished new build it is important to establish if the lender values the property with or without these furnishings.
Its Not Finished Yet!
It is not uncommon for a housing development to be behind deadline, as such it is important to consider if your new build mortgage offers you flexibility or a extended completion period. Such flexibility is not inherent to new build mortgages so be sure to ask.
Shared Equity Deals
Shared equity deals are exactly that, a deal where the equity is shared between multiple parties. For example you may purchase a 75% share in a new flat, the builder or housing scheme will either provide an interest free loan to you and ask for settlement at a date in the future or upon sale or rent the remaining 25% to you for a monthly rental figure.
are New Build Mortgages Readily Available?
Unfortunately not to the same degree as in the past. During the early 2000's large numbers of city centre and urban 2 bedroom apartments were established, many of these bought off plan. When these properties where completed upon they were often worth significantly less than the price paid.
In more recent times, with the 'credit crunch' property prices began to tumble, with these inner city apartments loosing bay far the most. Many mortgage lenders found their books were filled with apartments in negative equity.
As such their are few lenders who will lend on inner city middle of the road apartments. Those that will require larger than normal deposits, furthermore they will often require a statement of any incentives the developer has offered, such as furnishings to push the deal.
Unfortunately, due to the finger burning process most of these lenders have gone through, they will want such detail for all new builds, not just inner city developments.
As with most situations, you are best speaking with a mortgage broker to ensure you are getting the most competitive mortgage available.