Mortgage Adviser Stephanie Thayer , provides insight into the pros and cons of buying new builds, including part exchange and other incentives.
Pros of buying new builds
Typically new builds are fixed price so it’s very simple to know how much deposit and what size mortgage you’re going to need. During the mortgage application process, there is very little risk that the mortgage lender is going to down value a fixed price property.
One of the other great things is you get a brand new house that no one else has lived in it before – everything is brand new, lovely and shiny. A new build will usually be very energy efficient as well so it will have a good energy performance certificate. This is good for your energy bills and good for the environment.
A new build will come with a warranty that’s typically valid for 10 years, which is a nice thing to have. Some builders will offer incentives like a cash gift to help you pay your stamp duty or your legal fees. If you’re a homeowner with a property to sell, most builders will offer part exchange which is when they will buy your property from you. This makes the selling and buying process a lot smoother than having to put your property on the open market.
Cons of buying a new build
So, mortgage lenders will often restrict how much you can borrow when you’re purchasing a new build, especially if it’s a flat. So, you may need a slightly higher deposit than if you’re purchasing an older home. You can speak to a broker who can guide you on this.
New builds can often be subject to building delays, but the developers like you to obtain a mortgage offer as soon as possible after reserving a home. Mortgage offers are typically valid for just six months so when a build is significantly delayed, it can mean a second mortgage application with new interest rates.
Since nobody has lived in the home before you can find that upon move-in to a new build there are small issues or snags with the property. These are usually cosmetic, and if you inform the developers within a certain timeframe, they’ll often fix these issues for you with no charge.
Some developments will release sections of the development in stages, so if you’re in the first group of movers you may find that building work will continue on the development for a couple more years. This could mean dealing with noise and traffic.
If you would like to speak to us about your mortgage application for new builds and older properties, please do get in touch! We’d be happy to help.
