New Build Mortgage Scotland

Get in touch for an initial free, no-obligation chat about how we might be able to help you.

Get In Touch

[]
1 Step 1
keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right

New Build Mortgage Scotland

Carolyn Dunion explains the new build mortgage process and answers some frequently Googled questions.

Is it hard to get a mortgage on a new build? What’s the process in Scotland?

It’s not hard to get a mortgage for New Build. In fact, they’re very popular and generally, the mortgage products and application process don’t vary very much with a new build compared to buying a property off the open market.

Sometimes the builder might have different timescales that you need to be aware of, but it’s not necessarily difficult.

How long does the new build mortgage application process take?

The actual mortgage application part doesn’t vary just because it’s a new build. That comes down to clients’ individual circumstances.

Generally speaking, we can process mortgage applications quite promptly. The builders you’re buying from might want you to meet certain timescales. Even though your property might not be ready for six months or more, they usually want you to have your mortgage offer within a period of four to six weeks.

That puts a little bit of pressure on you and us to get your mortgage application processed quickly. But it’s more to do with the builder’s expectations than the lenders.

Who can get a mortgage for a new build in Scotland? Do you have to be a First Time Buyer?

No, you don’t have to be a First Time Buyer. Anybody can get a mortgage for a new build property. As long as your individual circumstances meet the criteria around affordability and you have a suitable deposit, there is no issue.

How much deposit do you need for a new build in Scotland? Can I buy a new build with no deposit?

It used to be the case that you needed a 15% deposit for a new build, which was higher than on a property bought in the open market. However, a number of lenders are now able to offer 90% and up to 95% mortgages.

The criteria around that can change, so it’s important to discuss that with somebody like myself, before you go ahead and reserve a new build property – to make sure you’re meeting the current criteria.

Generally speaking, you do need a deposit, but some builders offer different purchasing schemes. They might match your deposit to give you a larger total, but usually you’re going to need some cash. How much will vary depending on the time that you’re buying.

Chat With An Expert
The initial conversation is completely free and with no obligation. We usually take some information from clients so that we can offer meaningful advice.

How much can I borrow on a new build mortgage? Can I get a 95% mortgage?

How much you can borrow is the same for any property you purchase. It’s a combination of your income and your credit commitments, whether you have dependents and your age.

It’s no stricter for new builds, which is a good thing. And yes, you can get up to 95% mortgages on a new build – although a lot of lenders won’t accept that on flats, only on houses.

Sometimes those smaller deposit products are only available through certain intermediaries. You’ll be pleased to know that you can get all the available products through McKendry Dunion Financial.

What schemes are available on new build properties? What is the New Build Grant in Scotland?

At this moment in time, there aren’t really any schemes available. There have been in the past, but there’s nothing right now. I suspect we’ll see more initiatives like Help to Buy in the future, even though that has now finished.

New builds do tend to attract different schemes and opportunities, and they can change very quickly. It’s always worth checking with the builder you’re planning to buy from, because sometimes they offer incentives and schemes of their own. Also, you can check with your mortgage advisor.

Do you pay stamp duty on a new build in Scotland?

Sadly, you do. There’s certainly a stamp duty cost if you’re purchasing over a certain price threshold, and generally speaking new builds do tend to fall above that limit, under which there wouldn’t be any tax applicable.

What sometimes can confuse people is that some builders offer an incentive where they say ‘stamp duty free’. What they tend to mean by that is that they will pay the stamp duty on your behalf.

So it still exists, and it’s still a cost you need to factor in, unless of course you’ve got some scheme with the builder.

Are mortgage rates higher for new builds? Are there any other costs involved that we need to know about?

Generally speaking, the rates aren’t higher for new builds. In fact, you might find that you’re eligible for ‘green’ mortgages. These are available for properties that have a very good energy performance rating, which means they’re energy efficient.

A lot of new build properties are very energy efficient because they’re built to modern standards, so sometimes that’s a beneficial factor.

Generally there aren’t any additional costs, except that most builders will want you to pay a reservation cost. That varies hugely, from £100 to £1000 or even more. That reserves the plot for you.

If you then go and find for whatever reason that you can’t get a mortgage or you don’t want to go ahead with the transaction, that money is usually non-refundable. That’s a key difference from buying a property off the open market.

In a standard purchase you would put an offer in, and once accepted you would then go and do your due diligence to get a mortgage offer. If you failed at any of that, or there was a problem, you could just withdraw.

Everyone would be very disappointed, but they wouldn’t have lost any money. There’s an amount of money at risk when you reserve a new build plot.

Can I get a mortgage on a new build with bad credit?

Potentially – it depends what kind of bad credit you have. If you’ve had some issues, there are certainly lenders who are comfortable with a degree of bad credit and will lend on new builds.

But it really does depend on what that bad credit looks like. It’s important to discuss your specific situation with an advisor, so we can help you decide whether it’s something you can go forward with.

How do I remortgage my new build property?

Generally speaking, it’s exactly the same. The only time there’s something slightly different is if somebody has been part of the Help to Buy scheme in the past – where the government has a charge over their property title.

If that’s the case, you might find that it’s difficult or expensive to move to a new lender. If that’s your situation, you should take advice. But other than that scenario, there’s no difference.

What are the pros and cons of new build mortgages?

Yes, one of the advantages is that you often get access to green products which tend to be slightly cheaper. Or, there’ll be some form of incentive.

Other than that, the mortgages themselves don’t vary. It comes down more to the advantages of new build properties. One of those is that there’s a fixed price and you know what you’re buying – which in Scotland is a huge advantage.

You would expect to have a lot less maintenance with a new build property, and they tend to be cheaper to run, because they’re more energy efficient. Those are all factors that are attractive to buyers.

What else do we need to know about new build mortgages in Scotland?

A mortgage advisor can be really beneficial with new build purchases, for all the usual reasons. It’s good to get advice to help you navigate through all the different criteria.

There are also different ways you can structure your mortgage. If you’ve got a builder selling plots that are a long way from being ready, there are specific things you can do around the timing of mortgage offers, and how long they’re valid for.

Mortgage advisors will look at your personal situation and factor in a contingency should the property not be ready as planned. We can help you navigate that without too much difficulty.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR PROPERTY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.