Self-Employed Buyers
How New Build and Resale Mortgages Differ
The mortgage market treats new build and resale properties differently, and these differences are significant enough to affect your deposit requirements, your choice of lender, and your overall buying timeline.
Loan-to-value limits are typically lower on new builds. While you can get a 95 percent LTV mortgage on a resale property with some lenders, most cap new build houses at 85 to 90 percent and new build flats at 75 to 85 percent. This means a proportionally larger deposit for a new build than for an equivalent resale property.
The pool of lenders willing to consider new builds is smaller than for resale. Some lenders simply do not lend on new builds at all. Of those that do, their policies on LTV, incentives, and flat type vary significantly. We know which lenders are active and competitive on new builds at any given time.
Leasehold vs Freehold
New build houses are increasingly sold as freehold. New build flats are almost always leasehold. On leasehold properties, lenders look at the remaining lease length, which must be long enough to satisfy their criteria at the end of the mortgage term. New build leases typically start at 125 or 250 years, so this is rarely an issue on a first purchase, but it is worth understanding.
Adverse Credit Buyers
What to Consider When Choosing
When deciding between new build and resale, weigh up the following:
Your deposit size relative to the lower LTV limits that apply to new builds
Whether you want a structural warranty and modern energy efficiency standards included as standard
Access to government schemes, some of which apply only to new builds such as First Homes and Shared Ownership on new properties
Timeline flexibility, as resale properties can complete on a mutually agreed date while new builds complete when the developer is ready
The price premium typically associated with new builds compared to equivalent older properties in the same area
Chain risk: new builds have no chain above you, whereas resale purchases can collapse if a seller further up the chain withdraws
Personalisation: new builds may allow you to choose fixtures, fittings, or layout upgrades; resale properties come as they are
Running costs: new builds are typically cheaper to heat and maintain in the early years due to modern construction standards
