New-Build Mortgages: Rates, LTV & Eligibility

Are mortgage rates higher for new-build homes?

No, mortgage rates for new builds are generally competitive, and in some cases they may be more favourable due to energy efficiency.

Many lenders offer mortgage products that can apply to new build properties. Some also offer green mortgage products for energy-efficient homes.

Many lenders offer:

Standard market rates
Green mortgage products for energy-efficient homes

New build homes from Allison Homes are designed to modern energy standards, which can:

Lower your monthly utility bills
Improve lender confidence
Provide access to better mortgage products

A mortgage advisor can help you compare available mortgage options and identify products suited to your circumstances.

What is a mortgage retention?

A mortgage retention is when a lender holds back part of your mortgage until certain works on the property are completed.

This means the lender agrees to lend, but does not release the full amount immediately. It is more commonly linked to properties that need repair or improvement work.

This is more common in:

Renovation projects
Older properties requiring improvements

It is rare with new build homes, as they are typically completed and signed off before purchase, reducing risk for both buyer and lender.

Are new-build homes harder to get a mortgage on?

No, while new builds have slightly different lending criteria, there are many lenders who actively support new build purchases.

Some lenders apply specific rules to new build homes, but this does not mean they are difficult to finance. A broker can help match your circumstances and chosen property to lenders who support new build purchases.

Some lenders apply specific criteria to new builds, such as:

Maximum Loan-to-Value limits, often 85% to 95%
Developer approval requirements
Property type considerations, such as flats versus houses

However, this does not make them difficult to finance. In fact:

Many lenders offer dedicated new build mortgage products
New builds are often seen as lower risk due to quality and condition

With the right broker support, securing a mortgage for your new home is typically straightforward, as long as your financial profile aligns with lender criteria.

How can I get a mortgage with bad credit?

You can still get a mortgage with bad credit, but your options may be more limited and require specialist lender support.

Bad credit does not automatically stop you from buying a home. The impact will depend on the type of issue, how recent it was and how your financial position looks now.

Bad credit can include:

Missed payments
Defaults or CCJs
Low credit score

A mortgage broker can:

Assess how serious the issue is
Match you with lenders who accept your profile
Help structure your application to improve approval chances

You may need:

A larger deposit
Evidence that your financial situation has improved

Many buyers are surprised at the options available, so speaking to a broker early is key, especially when planning to buy a new build home.

What’s the difference between fixed and variable-rate mortgages?

Fixed-rate mortgages offer stable monthly payments, while variable-rate mortgages can change depending on market conditions.

A fixed-rate mortgage means your interest rate stays the same for an agreed period, which makes your payments more predictable. A variable-rate mortgage can rise or fall, so your monthly payments may change over time.

Fixed-rate mortgages:

Keep the same interest rate for a set period, such as two to five years
Provide predictable monthly payments
Can make budgeting easier

Variable-rate mortgages:

Can rise or fall
May increase or decrease your monthly payments
Can be affected by wider market conditions

Most buyers, especially first-time buyers, choose fixed rates when buying a new build home because they provide greater certainty during the early years of ownership.

What are green mortgages?

Green mortgages are mortgage products that offer incentives for buying energy-efficient homes, such as lower interest rates or cashback.

These products are designed to encourage sustainable homeownership by rewarding properties with strong Energy Performance Certificate ratings, typically A or B. New build homes are often well-positioned for these products because they are built to modern energy standards.

Benefits may include:

Lower interest rates compared to standard products
Cashback or financial incentives
Improved affordability due to reduced energy costs

The exact features vary by lender, but new build homes are often well-positioned to qualify. This can improve long-term affordability and overall value.

How can I improve my credit score before buying a home?

Improving your credit score can increase your chances of mortgage approval and help you access better interest rates.

Lenders use your credit profile to understand how you manage borrowing and regular payments. Taking steps to improve your credit position before applying can make your mortgage application stronger.

Key actions include:

Paying all bills and credit commitments on time
Reducing outstanding balances on credit cards and loans
Staying within your credit limits
Avoiding unnecessary new credit applications

You should also:

Check your credit report for errors
Ensure you are registered on the electoral roll

Even small improvements can make a difference to how lenders assess your application, particularly if you’re aiming to secure a competitive deal on a new build property.

Should I use a mortgage broker or go direct?

Using a mortgage broker gives you access to a wider range of lenders and tailored advice, often resulting in better mortgage options.

Going direct means you apply with one lender only, which may limit the products and criteria available to you. A broker can compare lenders and help match your circumstances to suitable options.

Going direct means:

You only access one lender’s products and criteria
You may miss more suitable or competitive deals

A mortgage broker can:

Compare multiple lenders across the market
Match your circumstances to lender criteria
Identify deals you may not find yourself
Support you through the full application process

This is particularly useful when buying a new build home, where timelines, incentives and lender requirements may need careful coordination.

How do mortgage valuations work for new-build homes?

Mortgage valuations confirm that the property is worth the agreed purchase price, protecting both you and the lender.

For new build homes, the valuation helps the lender confirm that the property provides suitable security for the mortgage. The surveyor may use plans, specifications and local comparable sales as part of the assessment.

For new builds, surveyors typically assess:

Property plans and specifications
Build quality and developer track record
Comparable sales in the local area

This is a standard part of the mortgage process and is arranged by the lender as part of your application.

What is loan-to-value (LTV), and why does it matter?

Loan-to-Value measures how much you are borrowing compared to the property’s value.

A lower LTV usually means you are borrowing a smaller percentage of the property value, which can reduce risk for the lender.

Lower LTV:

Means lower risk to the lender
Typically results in better mortgage rates

Example:

£300,000 property
£30,000 deposit
90% LTV

Loan-to-Value matters because it can affect which mortgage products are available to you and the interest rate you may be offered.

What mortgage term should I choose (25 vs 30 vs 35 years)?

Your mortgage term determines how long you repay your loan and directly affects both your monthly payments and total interest paid.

A shorter term usually means higher monthly payments but less interest paid overall. A longer term can reduce monthly payments, but may mean paying more interest over time.

Typical options:

25 years: higher monthly payments, less interest overall
30 to 35 years: lower monthly payments, more interest over time

Choosing the right term depends on:

Your monthly affordability
Long-term financial goals
Plans for overpayments or future income growth

Many buyers opt for a longer term initially to keep payments manageable, then reduce the term later if their circumstances improve.

What is a mortgage arrangement fee and should I add it to the loan?

A mortgage arrangement fee is a charge from the lender for setting up your mortgage, and it can usually be paid upfront or added to the loan.

The best option depends on your circumstances and the total cost of the mortgage. Paying the fee upfront may reduce the overall cost, while adding it to the loan can reduce upfront costs but means interest may be charged on it.

Typical fees range from:

£0 to £1,999+, depending on the product

You can:

Pay upfront, which can mean a lower overall cost
Add it to your mortgage, which can mean a higher total cost due to interest

When comparing mortgage deals, it’s important to consider:

The interest rate
The fee
The total cost over the fixed period

A lower rate with a higher fee isn’t always better. Your broker can help you compare true costs.

What types of mortgage are available to homebuyers?

There are several mortgage types available, each suited to different needs and financial situations.

The right mortgage will depend on whether you are buying your first home, moving home, purchasing an investment property or using a specific buying scheme. A mortgage advisor can help match your circumstances to suitable products.

Common types include:

Fixed-rate mortgages
Variable or tracker mortgages
First-time buyer products
Buy-to-let mortgages
Shared ownership mortgages

Understanding the different types can help you compare your options with more confidence before applying.

Can I use two mortgages at once?

Yes, in certain situations, you can hold two mortgages at the same time, subject to lender approval and affordability checks.

This can happen when a buyer is moving home but has not yet sold their current property, or when they already own another property. Lenders will want to understand whether both mortgage payments are affordable.

This may apply if:

You are moving home but haven’t sold your existing property
You own a buy-to-let alongside your residential home

Lenders will assess:

Your total income
Existing financial commitments
Ability to sustain both payments

A mortgage advisor can help you understand whether holding two mortgages is realistic for your circumstances.

Can I port my mortgage when I move house?

Yes, many mortgages are portable, meaning you can transfer your existing deal to a new property.

Porting can be useful if you have a favourable interest rate or want to avoid early repayment charges. However, you will still need lender approval for the new property and your current financial circumstances.

Porting can allow you to:

Keep your current interest rate
Avoid early repayment charges

However:

You will still need to pass affordability checks
Additional borrowing may be on a different rate

This can be particularly useful if you secured a competitive rate and are moving to a new Allison Homes property.

How does a mortgage work for first-time buyers?

A mortgage for first-time buyers follows the same process as any mortgage but often includes additional guidance and support.

First-time buyers usually start by understanding their budget, deposit and borrowing potential. A broker can help explain the process, compare lenders and guide you from your Mortgage in Principle through to a formal mortgage offer.

Steps include:

Get a Mortgage in Principle
Choose your property
Submit a full application
Receive a formal mortgage offer

Working with a broker and a developer can make the process smoother and more supported, especially when buying a new build home.

How do I calculate my monthly mortgage payments?

Monthly mortgage payments are based on your loan amount, interest rate and mortgage term, so exact figures are best calculated with a broker or lender.

Your payments will vary depending on how much you borrow, the deposit you put down and the mortgage product you choose. The term length also affects how much you repay each month.

Your payments will depend on:

The size of your deposit
The interest rate you secure
The length of your mortgage term

While online calculators can give a rough estimate, they don’t account for:

Your personal financial profile
Specific lender criteria
Product fees or incentives

Speaking to a broker will give you a clear and accurate monthly cost, helping you budget with confidence before reserving a home.

New-Build Mortgages: Rates, Eligibility, Credit, LTV and Valuations