Last reviewed: June 2026
TL;DR- New build properties often attract a price premium over comparable second-hand stock - lenders account for this by applying lower maximum LTV ratios on some new builds.
- Builder incentives (cashback, upgraded fixtures, paid stamp duty) must be declared to the lender and are typically deducted from the purchase price for LTV calculation.
- Mortgage offers on new builds are valid for a longer period than on second-hand properties - typically six months - to allow for construction delays.
- New build flats may face more restrictive criteria than new build houses from some lenders.
The New Build Premium and LTV
New build properties are typically priced at a premium over comparable second-hand properties in the same area, reflecting the value buyers place on a new property and the marketing costs incurred by the developer. When a buyer completes on a new build, the market value of the property may immediately be below the purchase price - a phenomenon sometimes called "buying off plan at a premium."
Most mortgage lenders are aware of this dynamic and apply a lower maximum LTV for new build properties than for equivalent second-hand properties. On new build houses, maximum LTV is commonly 85% rather than 90-95%. On new build flats, the maximum is often lower - 75-80% with some lenders. This means buyers need a larger deposit for a new build than they might expect based on second-hand property LTV availability.
Builder Incentives and Their Effect on LTV
Developers often offer incentives to attract buyers: cashback, upgraded kitchen or bathroom specifications, payment of stamp duty, furniture packages, or discounts on the purchase price. These incentives must be declared to the mortgage lender, as they affect the net value of the transaction. Most lenders require the incentives to be deducted from the purchase price before calculating the LTV. An incentive worth £10,000 on a £250,000 purchase reduces the effective price to £240,000 for LTV calculation purposes.
Undisclosed builder incentives - particularly cashback - are treated as a serious issue by lenders and can constitute mortgage fraud. All incentives must be declared on the mortgage application form and to the conveyancing solicitor.
Extended Mortgage Offer Validity
Standard mortgage offers are typically valid for three to six months. Because new build properties are often purchased off-plan and construction may not complete within the standard offer period, most lenders extend new build mortgage offer validity to six months, with some extending to nine or twelve months on request. If the property is not completed within the offer validity period, a new mortgage application may be required, subject to the lender's criteria and rates at that time.
New Build Warranty Requirements
Mortgage lenders require new build properties to have a recognised structural warranty in place at completion. The most widely recognised schemes are NHBC Buildmark, Premier Guarantee, and LABC Warranty. The warranty provides the lender with comfort that the property has been built to an acceptable standard and protects the buyer against major structural defects. Without an acceptable warranty, most lenders will not proceed.
New Build Flats and Leasehold Issues
New build flats are leasehold in most cases. Lenders assess the lease length, ground rent provisions and service charge reasonableness as part of the mortgage assessment. The Building Safety Act 2022 and related regulations introduced new protections for leaseholders in multi-storey residential buildings, including limits on ground rents and protections around remediation costs. Buyers of new build flats should ensure the lease terms comply with current lender requirements and that the building meets the relevant safety standards.
Frequently Asked Questions
Can I reserve a new build property before getting a mortgage in principle?
Yes, but it is strongly advisable to obtain a mortgage in principle (MIP) before paying a reservation fee, so that the buyer has confidence that the required mortgage is achievable. A reservation fee is typically non-refundable and is paid to the developer to take the property off the market. Discovering a mortgage is unavailable after paying a reservation fee can result in a loss of that fee.
What is a part-exchange scheme on a new build?
Some developers offer part-exchange schemes where they buy the buyer's existing property as part of the new build purchase, simplifying the chain. The developer typically offers less than full market value for the part-exchange property. The new build mortgage is taken on the new property in the standard way. The part-exchange element affects the deposit calculation and must be disclosed to the lender.
Can I get a 95% LTV mortgage on a new build?
Most lenders restrict new build LTV to 85% or below for houses and 75-80% for flats. A small number of lenders accept new build purchases at 90-95% LTV under the Mortgage Guarantee Scheme, but this is not universal. New build buyers should not assume 95% LTV is available and should check with a broker before committing to a reservation on a small deposit.
What happens if the new build is delayed past the mortgage offer expiry?
If the build is delayed and the mortgage offer expires before completion, the buyer must apply for an extension from the lender or submit a new mortgage application. A new application is subject to the lender's current criteria and rates, which may differ from those on the original offer. Extended delays can expose buyers to rate and criteria changes - this is a key risk of purchasing new build properties off-plan.
