Buying a New Build? Here’s everything you need to know
Are you considering buying a new build home? Then you’ll want to do your research: from finding out about the schemes that could help you buy a new build property to weighing up the pros and cons. Here’s what to consider….
What is a new build?
A new build property is one that is brand new and hasn’t been lived in. And if you buy your new build home ‘off-plan’ – which means buying before it has been built – you may be able to choose certain elements of the design too.
Help to buy schemes
If you want to buy a new build home, the good news is there are three main schemes available to help you secure your dream property. These are:
Help to Buy Equity Loan
This government scheme is designed to help people buy a new build home. When you buy through the scheme, the Government will lend you up to 20% of the property’s value – or up to 40% if the property is in London. This is called the equity loan. You need a minimum deposit of 5% and you’ll take out a mortgage for the remaining amount. The scheme is available to first time buyers and regional price caps apply on the value of property you can purchase, up to a maximum of £600,000 in London.*
*There are different Help to Buy equity loan schemes for England, Greater London, Wales and Scotland. They all vary; this information relates to England and Greater London only.)
Shared Ownership
With Shared Ownership you buy a share of a property and pay rent on the rest. The share you can buy is usually between 25% and 75%, however you can buy a 10% share of some homes. It could be a good option if you have a limited budget: because you’re only buying a percentage of a property, you’ll need a smaller mortgage and deposit. You can buy a bigger share of your home after moving in. This is called staircasing.
Deposit Unlock
Deposit Unlock is a brand-new scheme that has been devised in collaboration with lenders and the housebuilding industry. It’s designed to enable first-time buyers and existing homeowners to purchase a new build home from participating home builders with just a 5% deposit.
Why should you invest in a new build?
Lots of factors make buying a new build home very attractive.
- Your home will be brand new: Your new home will be freshly painted with a new kitchen and bathrooms This means you won’t need to worry about undertaking any expensive or time-consuming work when you move in. You can just unpack and enjoy your new home.
- Lower energy bills: All new build homes have to comply with the latest building regulations. This means they’re usually far more energy efficient than older properties – which means you could find your energy bills are much lower.
- Incentives: When you’re buying a new build property, the developer may offer incentives like paying your stamp duty.
- No chain: Buying a new build home from a developer means there will be no chain of buyers above you.
- You’ll get a new home warranty: All new build homes come with a warranty; they typically last for 10 years. With new builds, the National House Building Council (NHBC) warranty is most common.
Buying a new build home? Here’s what to watch out for
However, when you’re buying a new build home there are some things to look out for.
- Delays: New build homes aren’t always completed on time. And depending on the length of the delay your mortgage offer could be affected. So it’s vital to stay in contact with your mortgage adviser who can help you if required.
- New build snagging surveys/ Snagging: When you buy a new build home you may discover some snagging issues. You can book a professional to undertake a snagging survey that will pick up any problems.
- You’ll need to act quickly: When you buy a new build home, you often only have 28 days from reserving the property to exchange. So it’s important to discuss your mortgage options with an expert adviser before you start house-hunting. And once you’ve reserved a property, speak to your adviser as soon as possible to start the full mortgage application.
If you’re considering buying a new build home please do not hesitate to get in touch with us to discuss all your possible options, we’re always here to help.