You can’t escape the news about the turmoil in the mortgage market, high interest rates and how expensive mortgage repayments are in this country. It’s a worrying time for many who have mortgages. And it’s even more daunting for anyone who is looking to buy a new-build home and take out their first mortgage. You might be wondering what your options are? Should you hold off from buying? We recommend you get help from a specialist mortgage broker. Here’s 5 reasons why…
1. They are experts on mortgages for new-build homes Let’s be clear, if you are buying a new-build home, to make matters even more difficult, you will need a new-build mortgage. Why is that? Well one of the biggest reasons is down to the length of time between exchange and completion with new-build properties, especially those being bought off-plan. Most mortgages for new builds are valid for a maximum of six months, although this does vary by lender. If the completion of your property is not done in time, and you can’t get the lender to extend the offer, you may have to start your mortgage application all over again. There are new-build mortgages available with longer validity periods with some lenders who recognise that housebuilding projects can be subject to delays.
And as well as the extra time, because you pay a premium price for a new-build home, lenders are stricter on the mortgages offered.
It’s for these reasons you will do well to get a knowledgeable mortgage broker in your corner, ideally one who knows the whole market. By a ‘whole of market broker’ we means one who specialises in, or who has at least dealt with new-build mortgages previously. Not all brokers have, so you need to enquire when you start your broker search. Brokers with experience of new-build mortgages ought to be able to tap into a bank of appropriate lenders, saving you the stress, time, and effort.
2. They can advise on incentives
From time to time, new-build developers will offer further incentives to attract buyers. This can be anything from a fixed amount towards upgrades with the property such as flooring, or to having legal fees paid or help with the deposit. While they sound good in theory, these incentives, when added up, can affect your mortgage. Once you have a specialist broker in place, make sure to discuss any incentives you have agreed to with them, and they can advise if these can or will affect your mortgage. And if it will be impacted, they can outline in what way.
In all circumstances, it’s important to be open and honest with your broker to avoid any hidden surprises with your mortgage.
3. They will work to the necessary timescales
When you’re buying a new-build home, being able to move quickly with a mortgage application is important. A good broker will be able to access the right level of help with a variety of mortgage lenders, to ensure your mortgage application can be dealt with quickly. The reason for the need for speed comes down to how quickly developers like to exchange contracts.
When you buy a new-build home, you need to put down a reservation fee deposit to secure the property. From the point of paying this you may have only 28 days or so to exchange contracts. A broker will help you move quickly, using their lender contacts to help you apply for a mortgage in time.
4. They will identify the best interest rate and deposit deals
It has always been the case that interest rates are charged at a higher rate for new-build mortgages compared to mortgages on older properties. If you are looking to buy a new-build home, bear in mind you will be paying a premium price for the property. And unfortunately, new-build properties do lose some of their value once they are built and owners move in. For this reason, lenders have stricter loan to value (LTV) limits on new-build properties. Your broker will be able to help find you the lowest minimum deposit requirement amount, which is usually around 15% for new-build homes. Some lenders are asking for as much as 25%.
And while interest rates have been rising, the suite of mortgage offers from lenders are few and far between. A mortgage broker will be best placed to find you the most suitable options for your circumstances. In today’s difficult market, you ought to still expect high rates of interest, after all brokers cannot wave magic wands.
But if you do go ahead with a new-home purchase, it pays to plan to live in your new-build home for the longer term.
5. They can adapt to change if needed
There can be need to change your original plans, move mortgage lenders, or to re-apply for a new-build mortgage. And this might need to be done quickly. Once again, a specialist mortgage broker is well worth having alongside you to assist you when needed. If they have experience dealing with new-build mortgages, they will be aware of the hiccups which can happen along the way when buying a new-build home. They can certainly help remove some of the stress from the situation.
If you are serious about buying a new-build home, get a feel for how much new-build properties cost in the area you would like to live. You can do this easily on our website which pulls togethers the new-build homes available from a wide range of housebuilders across the country. Start you search here.
Then, find a specialist mortgage broker for help with what you can borrow or if you are eligible for any deals.