A new-build home is a great option, energy-efficient, chain-free and ready to move into. But getting a mortgage on one is not the same as buying an older property. Lenders treat new builds more cautiously, deposits are usually higher, and there are deadlines and valuation quirks that catch people out. This guide walks through exactly what's different and how to get it right.
Why new-build mortgages are different
New builds carry a price premium for being brand new, much like a new car, some of that value can fall away once the home is "second-hand". Lenders know this, so they protect themselves by lending a smaller proportion of the price, scrutinising developer incentives, and sometimes valuing the property below the price you agreed. None of this is a reason to avoid a new build, you just need to go in prepared and use a lender that's comfortable with them.
Deposits and LTV caps: houses vs flats
The biggest practical difference is the deposit. Lenders cap the loan-to-value (LTV) lower on new builds, and lower still on flats (which can be harder to resell in a soft market):
| Property type | Typical deposit needed | Typical max LTV |
|---|---|---|
| New-build house | 10 to 15% | 85 to 90% (some lenders up to 95%) |
| New-build flat | 15 to 25% | 75 to 85% |
| With a low-deposit scheme | From 5% | Up to 95% (eligible homes) |
Caps vary a lot between lenders, which is exactly why whole-of-market advice matters here. Understanding how affordability works and building the biggest deposit you can will widen your options.
A new build often sells for around 5 to 10% more than a comparable older home. If the lender's surveyor values it below the agreed price (a "down-valuation"), they'll lend against the lower figure, leaving you to find the difference. It's one of the most common new-build hurdles, so don't over-stretch on the asking price.
Developer incentives: the 5% rule
To sell quickly, developers often offer incentives, paying your Stamp Duty, throwing in flooring or white goods, or a deposit contribution. These are great, but there's a catch: most lenders only accept incentives up to 5% of the purchase price. Anything above that is typically knocked off the valuation, which raises your effective LTV and can reduce how much they'll lend. All incentives must be declared on a disclosure form, so be upfront, it's far better to structure them within the rules from the start.
Buying a new build with a small deposit
If you don't have a big deposit, a few routes can still get you into a new build in 2026:
- Mortgage Guarantee Scheme: a permanent government scheme (since 2025) supporting 5% deposit mortgages on homes up to £600,000, including new builds. The guarantee protects the lender, you don't pay for it, though 95% deals tend to carry higher rates.
- Shared Ownership: buy a share (often 10 to 75%) and pay subsidised rent on the rest. Because your deposit is based on the share, not the full price, you can get in for far less up front.
- First Homes: a 30 to 50% discount on selected new builds for eligible local first-time buyers and key workers, and the discount passes on to future buyers too.
- Deposit Unlock: the industry's 5% deposit scheme has closed to new applicants as of April 2026; offers already in place are still honoured. It's no longer an option for new purchases.
You generally can't combine these, so the right choice depends on your deposit, income and the development. A broker who knows the new-build market can tell you which fits.
Mortgage offers and construction delays
Here's a trap unique to new builds: a standard mortgage offer usually lasts about 6 months, but a new home might not be finished in time. Many lenders offer specialist new-build products valid for 9 to 12 months, and most allow an extension if the build overruns. The catch is that on extension or reissue, the lender may re-check your income, credit and the valuation, so avoid taking on new debt or changing jobs between offer and completion. Developers also often want you to exchange within 28 days of reserving, so your mortgage and conveyancing need to move quickly.
Snagging and warranties
New doesn't always mean flawless. Two things protect you:
- A snagging survey: an independent inspection that lists faults, from poor finishing to bigger defects, for the developer to fix, ideally before you complete (while you still have leverage). See our house surveys guide for how this fits in.
- A structural warranty: most new builds come with 10-year cover such as NHBC Buildmark (or Premier Guarantee / LABC). The builder is usually liable for defects in the first two years, with structural cover beyond that. Many lenders require an acceptable warranty before they'll lend.
Reputable builders also sign up to the New Homes Quality Code (or the Consumer Code for Home Builders), which sets standards for how you're treated.
Watch the lease on new-build flats
Most new flats (and some houses) are leasehold. The good news: ground rent on new long residential leases has been banned since 2022, so new leases should be "peppercorn" (effectively zero). Still, check the lease length, the service charge and any estate/management charges before you commit, your conveyancer will review these, and they affect both affordability and resale.
New-build mortgages have quirks, get them right
Lower LTV caps, down-valuations, incentive limits and tight deadlines all vary by lender. Debbie at DS Financial is whole-of-market and arranges new-build mortgages day in, day out, so you apply to the right lender first time. A no-pressure chat costs nothing.
Speak to DS Financial →New-build mortgages: frequently asked questions
How much deposit do I need for a new-build home?
Typically 10 to 15% for a new-build house and 15 to 25% for a new-build flat, because lenders cap LTV lower on new builds. Some buyers can put down as little as 5% via the Mortgage Guarantee Scheme or Shared Ownership.
Why are new-build mortgages different?
New builds carry a price premium that can fade once second-hand, so lenders are cautious, capping LTV lower (especially on flats), scrutinising incentives, and sometimes down-valuing. Using a new-build-experienced lender and broker matters.
Can I buy a new build with a 5% deposit?
Sometimes. The Mortgage Guarantee Scheme supports 5% deposits on homes up to £600,000, and Shared Ownership needs far less up front. Deposit Unlock closed to new applicants in April 2026.
What is the new-build premium?
The tendency for a new build to sell for more than a comparable older home (often 5 to 10%) simply for being new. It can erode once second-hand, so lenders may value below the price you paid.
How long is a new-build mortgage offer valid?
Standard offers last around 6 months, but specialist new-build products often run 9 to 12 months, with extensions for construction delays (the lender may re-check your circumstances first).
Do new builds come with a warranty?
Almost always, usually a 10-year structural warranty like NHBC Buildmark. The builder typically fixes defects in the first two years, with structural cover beyond. Lenders often require one.
Should I get a snagging survey on a new build?
Yes, it lists faults for the developer to fix, ideally before completion while you still have leverage.
Important: This article is general information, not financial advice. Lending criteria, LTV caps and scheme rules vary by lender and change over time, and figures are typical 2026 guides. Your home may be repossessed if you do not keep up repayments on your mortgage. For advice on your situation, Darren Talks recommends DS Financial (Appointed Representatives of Stonebridge Mortgage Solutions Ltd, FCA Firm Ref: 835094).
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