New build properties are an attractive proposition for many borrowers, whether they are a first-time buyer (FTB), have a growing family or are seeking a more suitable size home in their later years.
One of the many advantages of buying a new build property is the appeal of starting from scratch and having input into some aspects of the build design such as the type of flooring, the colour of the walls and the types of cupboards used in the kitchen.
Many new builds also offer greater energy efficiency, lower property maintenance and renovation requirements and a speedier chain-free purchasing process, making them an attractive solution for those borrowers looking to reduce the cost of energy bills and purchase a home that is move-in ready.
However, as with all property purchases, new-build homes can also come with challenges such as a new home premium for buying “brand new”, snagging issues and building delays that can push back move in dates and sometimes impact mortgage offers.
More recently, the challenges facing the new build market have been centred around the impact of higher interest rates and rising living costs that are squeezing the incomes of many UK households and significantly reducing the affordability and borrowing capacity of many borrowers.
This has prompted a lag in sales as developers struggle to sell properties in the slow-moving purchase market. As a key player in the FTB and specialist lending market, we fund a strong number of new build purchases and work closely with a number of property developers and homebuilding firms to address the needs of borrowers looking to buy a new-build home.
These current market conditions mean many housebuilders are trying hard to find innovative new ways to appeal to buyers by offering discount incentives, cost-saving solutions and reductions on the purchase price of a property in a bid to drive up sales.
Some of the savings can include money towards the cost of the mortgage, free carpeting and tiling within the property or the offer of free household appliances such as a fridge freezer in a bid to help buyers reduce the costs associated with moving home.
While some these incentives may be appealing and can reduce some of the costs associated with buying a home, they are not always widely accepted within the market, which is where working with a new build specialist, such as The Loughborough, can help. We have a wide range of solutions that can cater for the varying needs of borrowers purchasing a new build home, such as the availability of 95% LTV products and access to shared ownership schemes.
Builders’ deposits and incentives are also accepted provided the client puts down the 5% deposit themselves and any incentives are disclosed to the surveyor at the outset. In fact, one of our major USPs is that we accept builders’ cashback provided the deposit has been paid by the applicant from their own sources and the money is repaid by the builder on completion of the build and any incentives are disclosed to the surveyor at the outset.
Our Joint Borrower Sole Proprietor (JBSP) and Family Assist solutions have also been designed for those that need to boost borrowing power by using the income of up to four family members and are available on new build properties, including a 100% LTV on new build flats. Similarly, our Buy for Uni product is also available up to 100% LTV for new builds provided the property is within a 10-mile radius of a local university. We have also just made criteria enhancements where we now accept certain newly qualified professional applicants up to 95% LTV and between 50% and 100% of benefits income received, with certain provisions, across our entire product range.
For brokers with clients looking to purchase a new build home, working with a specialist lender can open up access to a wider array of mortgage offerings designed to maximise borrowing capacity, improve affordability and accept homebuilder incentives. Factors which can open the door to their dream home at a price and repayment terms they can comfortably manage.
Ashley Pearson is national BDM, at the Loughborough for Intermediaries