Backlinks HubFor most buyers in the UK, a property purchase means taking on debt. Around two-thirds of homeowners own their property outright, while the rest are paying off a mortgage.
If you’ve not yet placed a foot on the housing ladder, then the chances are good that you’ll need a mortgage before you can make a purchase. But exactly how do you go about doing this? Let’s take a look at a few key things to consider.
Understanding New Build Mortgages
New build homes offer a variety of modern features. They tend to be built to modern standards, which means greater efficiency, better appliances, and zero chance of you finding asbestos beneath the carpet.
If you’re buying a new-build home, then you might face stricter conditions when securing a mortgage. This is largely because new build homes are at greater risk of declining in value during the first few years.
You’ll also have just twenty-eight days to exchange contracts once the property has been reserved, which can put significant time pressure on the lender. New-build mortgage offers also tend to be time-limited, which can put pressure on you to get the purchase completed while the offer is still valid.
Recent Developments and Mortgage Support for New Build Homes
Recent changes in the housing market are worth paying attention to. For example, in July, Nationwide announced that it would make three key changes to its mortgage products, in order to help make it easier to get the keys to a new-build property.
These involve increasing the maximum loan-to-value ratio for houses to 95%, and for flats to 85%. The offer period is also set to be increased from six months to nine months. The lender is also going to allow first-time buyers to borrow six times their annual income, rather than just 4.5 times.
Government Schemes and Deposit Solutions
There are a number of government-backed schemes and deposit solutions aimed at helping first-time buyers onto the housing ladder. These include shared ownership, which allows for a split between renting and home-ownership. There’s also ‘deposit unlock’, which is a scheme designed to allow new homes to be bought using a mortgage of 95% loan-to-value.
For those in England, there’s also the First Homes scheme, which allows buyers to get a discount of up to 50% on the market value of the property. There are a few strings attached, here, however; you’ll need to be older than eighteen, buying for the first time, and earning less than £80,000 before tax.
Practical Steps and Specialist Advice
Securing a successful outcome usually means planning effectively. Make sure that you agree to the mortgage early, and that you get the transaction moving such that the offer won’t expire. If you’re buying off-plan, you’re vulnerable to delays in construction. It’s often worth looking for a conveyancer, and a mortgage broker, with special experience in new-build homes. That way, you’ll stand a better chance of dealing with the problems that come along with them.
