New build mortgages need clear-cut criteria to help intermediaries
31st January 2020
With many buyers opting for a new build property when they purchase a house, it’s important that lenders continue to provide well-defined products and clear-cut criteria to support this type of property and help intermediaries maximise the opportunities available.
The mortgage market is buoyant with UK Finance reporting that there were 33,370 home mover mortgages completed in October 2019, 4.2 per cent more than in the same month a year earlier.*
New builds need a distinct approach from lenders so that intermediaries have every chance to satisfy a rising mortgage demand. For example, as new builds are often bought off plan, an extended offer period of up to 6 months allows for the property to actually be built, very useful when a buyer has paid their deposit and allocated a budget for future costs.
A longer term on the mortgage can help keep monthly payments lower, and so we are seeing more lenders adopt longer maximum terms, such as 40 years. This helps with affordability and allows intermediaries to have more criteria options for buyers.
The deposit is still a big hurdle for many buyers. That’s why when we look at new builds it’s important to keep the deposit as low as possible, so the LTV needs to be as high as possible. At Leek United we offer up to 95% LTV on new build houses and flats**.
Families can also help buyers to raise the funds required for deposits. Some lenders, such as Leek United, accept family gifted deposits as part of their criteria and these can be used by buyers to help secure a new build property. This demonstrates the ways in which lenders can provide this type of specific criteria to help the new build market and support the growing demand from intermediaries.
Intermediaries can also look for lenders that offer products with no valuation fees and cashback to help keep initial outgoings to a minimum during the house purchase process.
We look at each case individually, and this includes the applicant’s employment record. Lenders will look at the length of time in continuous employment and we only require a 6 month continuous employment record.
Having a lender with a distinct approach to particular property types can deliver better opportunities for intermediaries when they review lenders with bespoke products and criteria for various sectors of the mortgage market, including new builds and the customers that buy them.
**Available for loans of up to £400,000
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