When it comes to buying a new home, there are many considerations to make. And it may be that the location you want to move offers a good range of pre-loved homes as well as new-build.
But which should you buy? Something you need to consider is that when buying new-build homes the mortgage process can be a little more complicated. Don’t worry, though. The Mortgage Dog will help you understand what you need to know.
New v pre-loved
New homes are very appealing because you’ll be the first person to live in that house. It really is a blank canvas and you won’t need to rip up tired up carpets are scrape several layers of wallpaper to make the house your home.
But not everyone loves a new build house. For some, a pre-loved house (we won’t call them ‘old’ as it can conjure up the wrong image) is their dream.
Homes built before the 90s tend to be larger, and for many that is essential. Others point to the fact that your Victorian town house has a lot more character than modern houses, while others prefer the large gardens of an older property.
But there are benefits to new build housing.
Benefits of new build
First of all, there’s the fact the house has probably not been completed yet. Buying off-plan is exciting as you can usually work with the house builder to customise your property, such as specifying the kitchen or bathroom. Putting your stamp on your first home can be an exciting experience.
Initiatives such as Help to Buy are often easier to take advantage of with new build homes, especially first-time buyers.
Most new build schemes come with a guarantee from the builder. If your property is registered with the National House Building Council, it will include a 10-year warranty with a protection scheme. This helps reduce maintenance costs and is less likely to give you sleepless nights.
New builds are often more energy-efficient than their older counterparts as they will include better loft insulation and up-to-date innovations.
New builds will usually be designed for modern life. You won’t need to start knocking down walls as you would with a pre-loved property.
Are there any pitfalls?
Of course, buying anything isn’t guaranteed, and while your new build house is nice and shiny, don’t think you’re going to always experience property paradise! There can be problems with new build houses like any home.
Remember, the house has never been lived in, so some settling will occur that can create a crack here and there and you may live in a building site for a few months while the estate is being completed. You may also have some delays that can mean your mortgage offer expires (we’ll look at that later). But if you can put up with those odd problems, then new build might be for you.
Mortgages and new builds
The first point to make is that developers often work to tight deadlines. With a pre-loved home, you may have months to wait from deposit to exchange, but that could be as little as 28 days with a new build.
This can be tricky for some mortgage companies as they have lots of paperwork to do, so be as prepared as you can be.
Mortgage offer periods tend to be valid for six months, which can create an issue if you’re buying off-plan. Delays can mean your offer is withdrawn before you complete your purchase. Some mortgage lenders have new build mortgages, so ask us about that if your next or first home is a new build property.
New build houses tend to devalue a little more quickly in the early years, so mortgage lenders are often stricter on the amount they are willing to lend. Just bear this in mind when looking at those showhomes!
As developers want to sell their houses, they can often offer freebies and incentives, such as paying legal fees or stamp duty. Be aware that some of these incentives could create issues if they’re up more than 5% of the property.
Some developers may insist you use their own mortgage broker or solicitor. Be aware that you do not have to use their choice of company.
If you want more advice about new build mortgages, you can contact us to answer your questions.
Your home may be repossessed if you do not keep up repayments on your mortgage
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