Why new builds get a different rulebook

Lenders treat new builds cautiously for one core reason: the new-build premium. Brand-new homes typically sell for more than comparable second-hand ones — the show-home shine, the warranties, the chain-free convenience all command a price — and some of that premium erodes once the home has been lived in. A lender advancing 95% against a premium-priced property risks the loan exceeding the home’s resale value almost immediately if the market softens. Their protection is simple: lend a smaller slice of the price.

Two other quirks follow. Completion dates on unbuilt homes are promises, not facts, which collides with the shelf-life of a mortgage offer. And builders sweeten deals with incentives — deposit contributions, stamp duty paid, upgrades — which muddy what the property is really worth, so lenders police them tightly. Every distinctive rule on this page traces back to one of those three realities.

Deposits and LTV caps: houses vs flats

The single biggest practical difference from buying second-hand — and it splits by property type:

The spread between lenders is unusually wide here and moves often — one major bank raised its caps to 95% on houses and 90% on flats in late 2025, while others hold much stricter lines and some demand 15% on flats regardless. That volatility is precisely why the “which lender” question matters more for new builds than almost any purchase type. Also note lenders’ exposure limits: many cap how many units they’ll finance in a single development, so on a big scheme the lender you wanted may simply be full.

New build mortgage contributions and incentives: the 5% rule

Deposit contributions, stamp duty paid, cashback, flooring and upgrade packages — builder incentives are standard practice, and how your lender treats them can reshape your entire purchase. Three things to have straight before you reserve:

• Everything must be declared. Everything. The valuer reports incentives to the lender under RICS rules, and your solicitor must certify them before completion. An undisclosed incentive is material non-disclosure — it can void your mortgage offer and strays into mortgage fraud territory. There is no grey area here.
• The 5% rule. Most lenders accept total incentives up to 5% of the purchase price without penalty. Above that, the standard treatment is to knock the excess off the valuation: a £400,000 flat with a £40,000 (10%) incentive package gets valued at £380,000 for lending purposes, and your loan shrinks accordingly.
• Treatment below 5% still varies — a lot. Some lenders accept a 5% contribution with no effect on lending at all. Others count it in the LTV sums so a 5% builder contribution plus your 5% cash reads as 90% LTV, not 85%. A few apply a blanket 85% cap the moment any incentive is declared, even free carpets. Same package, three different outcomes — this is the most lender-specific corner of the whole topic.

Played well, contributions genuinely help: with a lender that counts them favourably, a 5% builder contribution on top of your 5% cash can bridge you to a 10% threshold you couldn’t reach alone. A builder’s contribution is also distinct from a family gift — both can feature in one purchase, and the paperwork for the family side is covered in our gifted deposit guide.

The timeline problem: offer expiry and the 28-day squeeze

New-build purchases run on two clocks that don’t naturally agree:

• The builder’s clock is fast. Developers typically want exchange of contracts within 28 days of reservation. That means your mortgage needs to move from application to offer inside a month — which is why arriving at reservation day with a broker-arranged decision in principle already done isn’t optional, it’s the plan.
• The build’s clock is slow — and slippery. Mortgage offers typically last around six months, but off-plan completions can sit further out, and build dates slip. If your offer expires before the home is ready, you’re re-applying at whatever rates then exist.

The defences: many lenders offer new-build offer extensions — commonly one or two three-month extensions, sometimes requiring a refreshed (soft) credit check and re-valuation but usually keeping your original product; policies differ enough that extension terms should be a selection criterion, not an afterthought. On the legal side, push for a long-stop date in the contract — the backstop by which the builder must complete or release you. And between offer and completion, keep your finances boring: lenders can re-check before funds are released, and the general timeline pressures of how long a mortgage takes apply here with extra teeth.

Valuations, the premium, and the down-valuation risk

New builds are the classic down-valuation candidates: the lender’s surveyor values against local comparable sales, and on a fresh development the only comparables may be the builder’s own list prices — which the surveyor may not accept at face value. If the valuation lands below your agreed price, your loan is calculated on the lower figure and the gap comes from you, renegotiation, or a different lender whose valuer sees it differently. Declared incentives feed straight into this (they’re evidence the “real” price is lower), which is another reason the 5% rule bites. What to do when it happens — challenge, renegotiate, or re-place — is covered in our mortgage valuation guide; for new builds, the best insurance is a realistic price going in and a broker who knows which lenders’ valuers are pragmatic on your development type.

One more lender condition unique to new builds: an approved new-home warranty — NHBC Buildmark, Premier Guarantee, LABC or equivalent — must be in place before funds are released. Reputable developments have this as standard, but confirm it early on smaller or unusual schemes, because no warranty generally means no mainstream mortgage.

Schemes that work on new builds

New builds are where most buyer-support schemes live — several are new-build only:

• First Homes — 30–50% off selected new builds in England for eligible first-time buyers; supply is the constraint. Full rules in our First Homes guide.
• Mortgage Guarantee Scheme — the permanent government scheme backing 95% mortgages on homes up to £600,000, new builds included, working invisibly via participating lenders.
• Deposit Unlock — the housebuilder-backed 5%-deposit scheme for new builds; see our Deposit Unlock guide for its current status and alternatives.
• Shared ownership — predominantly a new-build scheme; the part-buy-part-rent mechanics are in our shared ownership guide.

For the full comparison — including savings-side help like the Lifetime ISA and the incoming FTB ISA — our first-time buyer schemes guide covers every live scheme in one place, and the broader buying journey lives in our first-time buyer hub.

Your pre-reservation checklist

1. Broker conversation before reservation day. Confirm which lenders accept the development, the property type, your deposit and the incentive package — before paying a reservation fee you could lose.
2. Decision in principle in hand. The 28-day exchange clock is survivable only if the mortgage groundwork predates it.
3. Get the full incentive package in writing — every item, with values — so it can be declared completely and placed with a lender whose policy suits it.
4. Match offer length to build date. If completion is more than four months out, extension policy and off-plan appetite should drive lender choice.
5. Negotiate the long-stop date and instruct a solicitor who handles new builds routinely — developer contracts are their own genre.
6. Budget beyond the deposit: reservation fee, upgrades you actually want, and a buffer for the possibility the valuation comes in light.

New build mortgages: FAQs

Last updated: July 2026. Lender criteria and scheme status verified at the time of writing and subject to change.