New builds are a popular option for many buyers as they’re more energy-efficient1, and therefore have lower running costs, and they also come with a 10-year building warranty, so you’re protected if anything were to happen during this time.
Not only that, there are a number of financial incentive schemes available to new build buyers, which could help you get on or move up the property ladder.
Let’s explore the various incentive schemes that may be available to you, whether you’re a first time buyer or not.
There are a handful of government schemes available for both first time buyers and existing homeowners, some of which are specifically geared towards new builds. One that is worth mentioning, which you can explore to help boost your savings is the Lifetime ISA incentive.
Other schemes include:
If you’re a first time buyer, you may have the option of buying a new build for 30-50% less than its market value. There are some eligibility criteria, with the most significant being financial requirements. You must be able to get a mortgage for at least half the price of the home and your combined household income must not exceed £80,000 (£90,000 in London).
Some councils may prioritise the allocation of First Homes discounts to essential workers, those on lower incomes, or people who already live in the area.
Ultimately, it is worth exploring as an option as it could get you onto the property ladder sooner than expected.
With Shared Ownership, you buy a share of the property’s market value, anywhere between 10-75% and pay rent to the landlord for the share they own.
In this case, the landlord may be the housing association, local council, or other organisations. If affordability is a concern, this could be a way to get your feet into the housing pool and start your journey of homeownership.
You can buy more shares as you go and you have the option of selling your Shared Ownership home at any time.
If you own 100% of the home, you can sell it via the open market. If you do not own 100% of the property, you must inform your landlord of your intent to sell.
Builder incentives schemes
While there are a few government incentive schemes available to help you buy a new build house, there are plenty of developer led initiatives available too.
If you’re buying a new build direct from a developer, they might offer an array of interesting incentives to sign off on a deal. These can include anything from a boost to your deposit, part-exchange deals, or even moving costs covered.
Part-exchange your house
Getting stuck in the homebuying chain can be frustrating, so many builders are now offering to help with the sale of your existing home.
If you want to buy a new build, your developer may offer a part-exchange deal where they purchase your home from you and sell it on themselves. The major advantage to this is the fact that you have a guaranteed sale. There is also no need to deal with estate agents, arrange viewings, or negotiate with multiple potential buyers.
To have the chance of qualifying for a part-exchange deal, you need to be a current homeowner and you must be moving to a new build home. In addition, each developer will most likely have their own set of terms for these transactions.
The incentive scheme, Own New, is a low deposit mortgage option that gives you the opportunity to buy a new build with only a 5% deposit. This is notoriously difficult with new builds, as they tend to be higher in value but can depreciate over time, so lenders are reluctant to lend with lower deposit amounts.
Own New reduces the risk for lenders, so they are more willing to lend at favourable rates.
Own New is also available to all homeowners, making it an attractive option for existing homeowners as well as first time buyers.
The builder may offer you a cash incentive to help fund your deposit, or pay for other costs involved in moving house. These cash incentives are paid to your solicitor on completion and will need to be declared to your mortgage lender if you’re applying for a mortgage. Cash incentives can be up to 5% of the purchase price of your new build home.
Stamp Duty and other costs
Many builders offer discounts on the buyer's costs of purchasing a new build home, and part of this could include a contribution towards Stamp Duty and legal fees, white goods for the kitchen, or the landscaping of gardens. These may all be paid for as an extra incentive to prospective new build buyers and may very well be the cherry on top which gets them a sale.
Getting expert advice for new build mortgages
Have you explored the idea of using incentive schemes to buy a new build house and feel ready for the next step? Are you just starting out with your research?
No matter where you are in your homebuying process, we’re on hand to help you achieve your dreams of homeownership.
Get in touch with us today and let’s discuss your options for buying a new build. We can help you assess your affordability, highlight suitable incentive schemes, and get the ball rolling on securing a mortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.