With demand for residential property heating up and demand for commercial property cooling down, more and more commercial properties are being turned into residential homes.
As a Guildford mortgage broker that works with Seymours Estate Agents, a leading Surrey estate agent, we’re seeing it first-hand.
Take one of its live developments in Woking town centre, for example. Once an office, the site has now been converted into 39 new build properties – all of which we’re working with Seymours on to help prospective purchasers get a new build mortgage. And, importantly, all of them are registered with the Own New Scheme, which is run by a company that helps to deliver reduced mortgage rates and smaller deposit mortgages on new builds.
However, are new build mortgages the same as standard mortgages? In short, the answer is ‘no’. Here’s why.
Things to consider when getting a new build mortgage?
New build mortgages aren’t that different from standard mortgages. But there are some differences that can make applying for a new build mortgage slightly more complicated than a standard mortgage. Here are three to consider:
1. Mitigating risk
Lenders view new build properties as a slightly riskier affair than established properties. As an unknown quantity, new build homes bear the risk of dropping in value in the early years. Well, at least that’s the view lenders take. So, as a way in which to protect themselves, they’ll often require a larger deposit for new build purchases, which can be up to 25%. A good mortgage broker can help you navigate this – and even help you buy a new build property with a small deposit. Importantly, the Deposit Unlock scheme, which helps people purchase a new build with as little as a 5% deposit, is available. However, it’s only available via a mortgage broker.
2. Quick mover
As if getting a mortgage and buying a property isn’t already a time-sensitive task, lenders generally like to see contracts exchanged within 28 days. This means that you need to have a team of good mortgage brokers behind you in order to get the deal over the line. As a Surrey new build mortgage broker, we not only have access to the best new build mortgage deals in the UK, but our team of new build mortgage specialists know how to move things along as quickly as the lender requires. When it comes to new build mortgages, timing is everything. And that’s why we would always advise using a mortgage broker for new build mortgage applications.
3. Make an off-plan plan
As we often remind our readers, a mortgage offer lasts up to six months from the point of offer. However, if you are buying off-plan with a mortgage, then you need to remember that building works often overrun. If this does happen to the property you’re looking to buy, to the point that it exceeds the mortgage offer period, you might need to go through the new build mortgage application process again. And, if your financial situation changes during this period, or if the value of the property falls, then this could make getting a new build mortgage offer more challenging the second time around.
Not only that, but if you’ve committed to the purchase and the lender deems that it’s fallen in value, you may be obliged to buy it without the means to do so if the lender decreases the amount it will lend you and you’re faced with a shortfall. And this is where a new build mortgage broker is worth its weight in gold, as they’ll work with the lender to make sure the property planets are aligned.
Can we help?
Buying a new build property is slightly more challenging than buying a well-established property – but it’s not beyond the realms of possibility. And if you use a mortgage broker, then your chances of getting a new build mortgage in a timely manner are certainly increased.
Need new build mortgage advice? If so, contact our team of Guildford mortgage brokers on 01483 238280 or e-mail info@complete-mortgages.co.uk.
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