Valuing a New Build for a Mortgage Application
Valuations in new build mortgages are always a challenge; with lenders often arriving at a lower figure than a developer is selling a property for.
In many cases, this is because the lender needs to consider any devaluation when a new property is no longer considered new - and will usually lend up to a maximum proportion of the sale price.
For many new build buyers, this means needing to come up with a larger deposit, or take out extra borrowing to cover the higher deposit required.
Here we'll run through how new build valuations to work, and how to manage the process smoothly. For tailored advice from an independent broker, contact Revolution Brokers on 0330 304 3040 or email us at [email protected].
Why are the Valuations Different on New Builds Between Lenders and Developers?
In a nutshell, the disparity exists because to a lender, a new build is a higher risk property, and might be harder to sell were they in a repossession scenario.
Newly built properties will be constructed to regulated standards, and be more energy-efficient than older homes. However, they depreciate quickly when sold, and it can be challenging to sell a new build that has already been lived in.
Common issues with new build property values relate to the low-cost land a developer has purchased for the construction, with problems such as:
- Road noise.
- Close to sewage plants.
- Airport proximity.
- Situated new railway lines.
- Noise pollution.
- Close to industrial areas.
Some developments are even built on top of old landfill sites and can result in subsidence and other issues.
2023-05-09 
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