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Is it Easier to Get a First-Time Buyer Mortgage on a New Build?

First-time home buyer UK applicants also feel their mortgage prospects are improved when purchasing a new build, often alongside one of the many government schemes for first-time buyers.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-14
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Is it Easier to Get a First-Time Buyer Mortgage on a New Build?

Applying for a first-time buyer mortgage can be complex, with so many products, lenders and structures to choose between – so could a first-time buyer new build property provide an easier solution to getting on the property ladder?

Picking a first-time buyer new build home can be a great option from a practical perspective, with a modern, energy-efficient and well-made property that hasn’t ever been lived in before.

Many first-time home buyer UK applicants also feel their mortgage prospects are improved when purchasing a new build, often alongside one of the many government schemes for first-time buyers.

However, there can be downsides where lenders assume a first-time buyer new build will depreciate as soon as it's no longer a new property, so it's important to understand the pros and cons and select the right first-time buyer mortgage to help you move forward.

Is a New Build Mortgage Different From General First-Time Buyers Mortgage Rates?

While some lenders will advertise a first-time buyer new build mortgage product, the reality is that these mortgages aren't particularly different from any other. However, some property developers and lenders will offer incentives or schemes to try and attract first-time home buyer UK applicants.

It is also important to recognise that first-time buyers mortgage rates may not be the most competitive, and some lenders will be cautious of a premium placed on the sale value of a first-time buyer new build.

There is the potential to find that a first-time home buyer UK development property depreciates in value, either due to the desirability of a new build or because the home isn't now new to future prospective purchasers.

Either way, the deposit required for a first-time buyer new build mortgage tends to be at a fairly high Loan to Value unless you have saved a substantial despot.

Provided you’re looking to buy a first-time buyer new build for the long term, this is less likely to be an issue, but you may need to consider your eligibility for government schemes for first-time buyers that can offset the premium you may pay for a first-time buyer new build to improve your mortgage affordability.

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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Key Considerations When Comparing First-Time Buyers Mortgage Rates

There are several ways to approach your mortgage, depending on the currently available first-time buyers mortgage rates and whether you already have a first-time buyer new build property in mind.

Lenders will offer the best first-time buyers mortgage rates to applicants with deposits of 15% or above. Still, it's important to consider the affordability and eligibility criteria each lender applies – which depend very much on their policies.

In essence, the less of a percentage you need to borrow on a first-time buyer mortgage, the better the first-time buyers mortgage rates you'll be eligible for, but using a government first-time buyer scheme may also make a difference to the lenders whose products you can apply for.

How to Improve Your Mortgage Prospects to Buy a First-Time Buyer New Build

If your heart is set on a newly built property, but you've found that the expected depreciation means you can't borrow as much as you need to, or your deposit doesn't qualify you for the best first-time buyers mortgage rates, you might consider some of the support schemes that may be useful.

We’ve summarised some of the popular government first-time buyer scheme options that may be relevant to new-build property purchases.

Using First Homes to Buy a First-Time Buyer New Build

First Homes is one of the newest government schemes for first-time buyers, which offers discounts from 30% to as much as 50% on the cost of buying a newly built property. The home cannot be sold for over £250,000, or £420,000 in London, representing a good opportunity for a first-time home buyer UK.

Eligible first-time buyer applicants can include low-income borrowers, local residents and key workers with a household income of up to £80,000, or £90,000 in London.

Applying for a Shared Ownership First-Time Buyer Mortgage

Shared Ownership is a government first-time buyer scheme that allows buyers to purchase from 25%, and sometimes 10% of a property, with a staged acquisition process to help a first-time buyer new build applicants increase their ownership proportion over time.

Once you have secured a first-time buyer mortgage, you then pay a nominal rent on the balance owned by the housing association on the proportion they continue to own.

First-time buyer new build applicants to Shared Ownership need a minimum deposit of 5%, based on the purchase value, and will still need a first-time buyer mortgage to cover the borrowing.

The Benefits of a Broker to Help Secure a Mortgage on a First-Time Buyer New Build

Purchasing a first-time buyer new build can be a great option for several reasons, not least a more energy-efficient and well-made property that is eligible for some of the best government schemes for first-time buyers.

However, as with any first-time home buyer UK mortgage, it’s essential to review your circumstances, such as income, deposit value, the total amount you wish to borrow, and even property location, to determine whether you can benefit from any of the many first-time buyer mortgage schemes.

As a whole-of-market, independent broker specialising in helping new buyers secure the best possible first-time buyers mortgage rates, Revolution Finance Brokers can help by:

  • Signposting the right government schemes for first-time buyers that can help you grow your deposit and accumulate your savings to reduce your LTV on a first-time buyer new build and lock in more competitive interest rates.
  • Helping you find the right lender with the first-time buyer mortgage products best aligned with your borrowing needs, whether you're purchasing through a government first-time buyer scheme or looking to borrow as much as you can against your current income.
  • Comparing every first-time buyer mortgage in the market, with whole-of-market access to consider niche first-time buyer new build options that may not be available to the general public.

Our accomplished first-time buyer new build experts can provide confidential, independent guidance to improve your prospects of securing a first-time buyer mortgage without paying over the odds for a first-time buyer new build borrowing deal.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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