What makes new build mortgages different
New build mortgages work on the same principles as any other mortgage, but there are specific considerations that don't apply to older properties. Getting these right early can be the difference between completing smoothly and losing your reservation.
Mortgage offer periods
Most lenders issue mortgage offers valid for 6 months on new build properties (compared to 3–6 months on existing homes). This sounds like plenty of time, but build delays are common — particularly on larger developments. If your offer expires before completion, you'll need to re-apply. Some lenders will extend on request, but this isn't guaranteed, and if rates have changed since your original offer, you won't necessarily keep the same deal.
We monitor offer expiry dates for all our new build clients and flag any risk well in advance.
Exchange deadlines
Developers typically require you to exchange contracts within a set window of reserving your plot — often 28 days. Your mortgage needs to be in place (or very close to it) before you can exchange, which means starting the process early is essential. If your mortgage isn't ready in time, you risk losing your reservation deposit.
The single most common mistake we see with new build buyers is leaving the mortgage too late. If you've reserved a plot, contact us immediately — not once you've spoken to the developer's in-house adviser.
Developer incentives and how they affect lending
Developers often offer incentives to attract buyers — cashback, upgraded fixtures and fittings, part-exchange on your existing home, or contributions toward legal fees and stamp duty. These can be genuinely valuable, but they need to be handled carefully.
If the total value of incentives exceeds a threshold (typically 5% of the purchase price), most lenders will deduct this from their valuation when calculating your loan-to-value. This means you may be able to borrow less than you'd expect. You must also declare all incentives to your lender — failing to do so can be treated as mortgage fraud, regardless of whether it was intentional.
High-rise and tall building restrictions
This is one of the most misunderstood issues in new build lending, and it catches buyers off guard particularly in London and larger towns where apartment blocks are common.
Many high street lenders restrict or refuse lending on buildings above a certain number of storeys. The threshold varies by lender, but commonly:
- Buildings of 4 storeys or fewer — broadly accepted by most lenders
- Buildings of 5–6 storeys — some lenders will consider, others won't
- Buildings of 7+ storeys — the pool of willing lenders narrows considerably
- Buildings of 10+ storeys — specialist lenders often required; standard high street lenders frequently decline
The issue isn't just height in isolation — it's also lender exposure. If a lender has already lent heavily on a particular development or type of building, they may decline further applications even if they'd normally accept the property type. This is called concentration risk, and it's invisible to buyers until an application is declined.
If you're buying a flat in a tall building — particularly in London or a new city-centre development — talk to us before you reserve. Discovering the lender restrictions after you've paid your reservation fee is a painful and avoidable situation.
Deposit Unlock
Deposit Unlock is a scheme backed by participating housebuilders that allows buyers to purchase a new build home with just a 5% deposit on properties up to £833,250. It works via a mortgage indemnity guarantee, which protects the lender against losses above a certain loan-to-value threshold — in exchange, lenders offer 95% mortgages on eligible new build properties.
Not every development or every lender participates, so it's worth checking early whether the property you're interested in is eligible. For first-time buyers with a small deposit, it's one of the most practical routes onto the new build ladder. See our full guide to small deposit mortgage options for first-time buyers.
We work with new build buyers across Essex and London every week. Call us or send a message.
The new build mortgage process, step by step
- Step 1 — Speak to us before you reserve. We'll confirm how much you can borrow, check the building is mortgageable (especially important for flats and tall buildings), and get a mortgage in principle ready.
- Step 2 — Reserve your plot. Once you have a mortgage in principle and you're happy with the property, you can reserve with the developer and pay the reservation fee.
- Step 3 — Full mortgage application. We submit your full application immediately, aiming to have a formal mortgage offer in place well ahead of your exchange deadline.
- Step 4 — Exchange contracts. Your solicitor will manage the exchange. You'll need your mortgage offer in place at this stage.
- Step 5 — Completion. When the build is finished and the property is ready, your solicitor draws down the mortgage and you get the keys.
FAQs
Most lenders offer 6 months on new build properties. If your build is delayed beyond this, you'll usually need to re-apply — and the new rate may differ from your original offer. Some lenders will extend on request, but this isn't guaranteed.
It depends on the number of floors. Many high street lenders restrict lending above 6 or 7 storeys, and some won't lend above 4. Above these thresholds, the lender pool narrows and specialist lenders may be needed. Talk to us before reserving on any tall building purchase.
Yes. Incentives above roughly 5% of the purchase price can be deducted from the lender's valuation, reducing how much you can borrow. You must also declare all incentives to your lender.
Deposit Unlock lets eligible buyers purchase a new build with a 5% deposit on properties up to £833,250. It's backed by participating housebuilders via a mortgage indemnity guarantee. Not every development participates, so check early.