New Build Mortgage: Lender Rules for Houses, Flats and Incentives

By Jake Stott, Knox Mortgages. Reviewed by an adviser authorised under Fort Advice Bureau, FCA FRN 972730. Published 25 September 2026. Last reviewed 25 September 2026.

A new build mortgage is a residential mortgage used to buy a home that has been built, converted or refurbished within the last two years and has not been lived in or sold before. It works like any other repayment mortgage, but lenders apply extra rules: lower maximum loan to value on flats, a cap on developer incentives, a building warranty requirement and a tighter window between mortgage offer and completion.

Those extra rules are where new build purchases go wrong. A 95% mortgage that works on a new build house can fail on a new build flat at the same price. A developer’s “£15,000 towards your deposit” can quietly reduce what the lender will lend. A valuation that comes in below the asking price leaves you to fund the gap in cash. This guide sets out what the big lenders actually allow in September 2026, with the arithmetic, so you know the rules before you pay a reservation fee.

Is a new build mortgage different from a normal mortgage?

The product is the same, the underwriting is not. There is no separate “new build mortgage” product type in the way there is for buy-to-let or shared ownership. You get the same two-year or five-year fixed rate, the same affordability assessment and the same repayment term. What changes is how the lender treats the property. Nationwide defines a new build as a home “built, converted or refurbished within the last two years, which hasn’t been sold”, and that definition is broadly shared across the market.

Lenders see new builds as higher risk for three reasons. First, prices carry a new build premium that tends to fall away once the home becomes second hand. Second, developer incentives can inflate the headline price. Third, large developments put a lot of near-identical flats on the market at once, which makes resale values harder to support. So lenders respond with lower loan to value limits on flats, a 5% ceiling on incentives, mandatory use of the UK Finance Disclosure Form and specialist valuations. Your income, credit and deposit are assessed exactly as they would be on any other purchase.

How much deposit do you need for a new build house or flat?

You need at least 5% for a new build house and usually 10% to 15% for a new build flat. Every major lender we checked lends up to 95% loan to value on new build houses, subject to product availability. Flats are where the lenders split. Nationwide, Halifax and Barclays cap new build flats at 85%, which means a 15% deposit. NatWest allows 90% on new build flats. Santander allows 95% on new build flats, but only for loans up to £380,000.

The deposit rules interact with incentives. Halifax says the mortgage plus any incentive cannot exceed 95% LTV on a house or 90% on a flat. Nationwide does not accept builder gifted deposits or financial incentives at all above 90% LTV. So a flat buyer with a 10% deposit and a developer contribution may find the contribution reduces the loan rather than helping. If you are buying with 5%, read our guide to the 5% deposit mortgage for how the 95% market works more broadly.

New build maximum LTV and offer validity by lender (September 2026)

Source: each lender’s intermediary criteria pages, checked 25 September 2026. Maximum LTV is always subject to product availability, loan size and your circumstances. Criteria change without notice.

What are developer incentives and why do lenders cap them?

A developer incentive is anything of value the builder gives you to close the sale: cash towards your deposit, cashback on completion, paid legal fees, paid stamp duty, free carpets or kitchen upgrades, a part exchange deal or mortgage payments covered for a period. Lenders cap them because an incentive is effectively a discount the headline price hides. A £300,000 flat with £20,000 of cash incentives is really closer to a £280,000 flat, and the lender wants to lend against what it is really worth.

The market standard is a 5% ceiling. Nationwide allows incentives “up to a maximum total of 5% of the purchase price or valuation”. Santander caps cash or cashback at 5% of the purchase price. Barclays will accept a package above 5%, but deducts the excess from the valuation before working out your loan to value. Barclays also states that upgrades such as white goods, flooring and kitchen improvements do not count towards the 5%. The rules differ in the detail, which is why the same incentive package can work at one lender and break the application at another.

What is the UK Finance Disclosure of Incentives Form?

The UK Finance Disclosure Form is a standard document the developer completes for every new build sale, listing the price, every incentive, the tenure and the construction method. It has been compulsory since August 2018, there is only one valid version, and it must not be altered. The developer’s sales team completes it and your conveyancer passes it to the lender, and Nationwide requires a copy completed in full to go to the valuer as well.

Buyers rarely see it, which is a mistake. Ask the sales office for a copy as soon as you reserve. Check that the price matches your reservation form, that every incentive you were promised is listed, and that nothing appears that you were not told about. If an incentive appears on the form that was not declared to your broker, the lender can reduce the loan or withdraw the offer late in the process. If an incentive you were promised is missing from the form, you may not receive it. Getting this document right early is one of the simplest ways to avoid a last minute problem.

Worked example: how a large incentive reduces what you can borrow

Here is how the 5% rule works on a £300,000 new build house with a 5% deposit, at a lender that deducts incentives above 5% from the valuation.

The fix is usually to ask the developer to convert part of the cash incentive into a price reduction, or into non-cash upgrades that sit outside the 5% at lenders such as Barclays. At a lender like Nationwide, where no financial incentives are accepted above 90% LTV, the answer is to choose a different lender or put down 10%. Structuring this correctly before exchange is part of what we do on every new build case.

What is the new build premium and what happens if the valuation comes in low?

The new build premium is the extra you pay for a brand new home compared with an equivalent second hand one, and it is the main reason new build valuations come in below the asking price. The lender lends a percentage of the lower of the price and the valuation. If the surveyor values the home below the price, your loan shrinks and you cover the difference in cash, renegotiate the price or walk away.

Developers price off their own recent sales on the same site, often supported by incentives. Surveyors instructed by lenders look at comparable resale evidence and are told about every incentive through the Disclosure Form. That gap is where down-valuations come from, and they are most common on large flat developments and in the later phases of a site where earlier buyers are already reselling. Our mortgage valuation guide explains how lender valuations work and when a challenge is realistic.

Worked example: a down-valuation on a 95% new build mortgage

A 4% down-valuation almost doubled the cash this buyer needed. Keeping the original loan is not an option either, because £285,000 against £288,000 is 98.96% loan to value, above every mainstream lender’s limit. The realistic options are to ask the developer to drop the price to the valuation, find the extra £11,400, or reserve a different plot. This is why we tell new build buyers to hold back a buffer and never assume the valuation will match the brochure.

How long does a new build mortgage offer last?

Most new build mortgage offers last 6 to 9 months, and the length matters more than on any other purchase because you often apply before the home is finished. Barclays and NatWest issue 6 month offers on new builds, with extensions available on request. Nationwide gives 9 months (270 days) with no extensions. Santander gives 9 months on its new build only products and will only consider an extension in the last two weeks of validity, after re-scoring you and running a new credit search.

An extension is never automatic. Lenders typically want updated payslips, a new credit check and sometimes a fresh valuation. If your income has dropped, your credit file has changed or the property value has moved, the extension can be refused and you are back to a new application at whatever rates apply then. Some specialist products and lenders offer longer windows for off-plan purchases, but these are the exception. The practical rule is simple: apply when the developer can give you a realistic build completion date that falls well inside the offer period. For what happens between offer and completion generally, see what happens after a mortgage offer.

Can you get an off plan mortgage?

Yes, but you cannot get a mortgage offer that lasts for the whole build on most off plan purchases. Buying off plan means reserving and often exchanging contracts before the home is built, sometimes 12 to 24 months ahead. Mainstream lenders will not issue an offer that runs that long. What happens in practice is that you get a mortgage in principle at reservation, exchange with your deposit, and then apply for the full mortgage when the developer confirms the build is within six months or so of completion.

The risk sits in the gap. If rates rise, your income changes or the valuation falls between exchange and your full application, the mortgage you planned for may not be available, and you are already contractually committed with a deposit on the line. Anyone buying off plan should stress test affordability at a higher rate and keep the deposit they exchanged with separate from the cash buffer they may need later. Once exchanged, the developer’s notice to complete usually gives you 10 working days, so the mortgage must be ready to go before that notice lands.

What happens with reservation fees and exchange deadlines?

A reservation fee takes the plot off the market and fixes the price for a set period, and most developers then expect you to exchange contracts within about 28 days. Reservation fees are commonly between £500 and £2,000, though some developers charge more on higher value homes. The fee usually comes off the price at completion. Whether you get it back if you pull out depends on the reservation agreement, and developers registered with a consumer code such as the New Homes Quality Code must set those terms out clearly.

The 28 day window is tight. In that time you need a full mortgage application submitted, a valuation booked and your conveyancer through the searches and the developer’s legal pack. Leave the mortgage until after reservation and you may miss the deadline, lose the price or lose the plot. The order that works is: get a decision in principle from the lender you will actually use, check your deposit and incentive structure against that lender’s rules, then reserve. If the developer pushes their own in-house broker, you are free to use your own. The developer’s broker works for the developer’s deadline.

Do lenders require a new build warranty?

Yes. Mainstream lenders will not lend on a new build without an acceptable structural warranty, usually a 10 year policy from a provider such as NHBC, LABC Warranty or Premier Guarantee. Nationwide says plainly that it is unlikely any mortgage provider will lend on a property without a warranty. Under the standard 10 year structure, the builder is responsible for fixing defects in the first two years and the warranty covers specified structural defects for years three to ten.

Lenders keep lists of accepted providers. Halifax, for example, lists more than 20 including NHBC, Premier Guarantee, LABC Hallmark, Checkmate, Build Assure and Advantage HCI. The alternative for small developments is a Professional Consultant’s Certificate, where an architect or surveyor signs off the build, but lenders limit these. Barclays only accepts them on developments of no more than five properties and does not accept retrospective warranties. If the warranty provider is not on your lender’s list, you need a different lender before exchange, not after. Unusual construction methods can add another layer; see our non-standard construction mortgage guide.

How does part exchange work on a new build?

Part exchange means the developer buys your current home so you can buy one of theirs without waiting for a chain. It removes the risk of your own sale falling through, which is real value on an off plan purchase with a completion date you cannot control. The trade-off is price. Developers use independent valuations and typically offer below the open market value of your home, because they carry the cost and risk of reselling it.

For the mortgage, part exchange is treated as an incentive and must appear on the UK Finance Disclosure Form. The lender wants to know the price agreed for your old home and whether it is above market value, because an inflated part exchange price is another way of discounting the new build. Your new mortgage is assessed as a normal purchase with your equity from the old home as the deposit. If you are moving from an existing mortgage, check early charges on your current deal and whether porting it to the new build is possible, because the timing of a developer’s completion rarely lines up with a fixed rate ending.

Can you use shared ownership or First Homes on a new build?

Yes to both, though they work very differently in 2026. Shared ownership is widely available on new build developments, where you buy a share of between 10% and 75% of the home, take a mortgage on that share and pay rent on the rest. It suits buyers whose income will not stretch to a full mortgage on a new build at local prices. Our shared ownership mortgage guide covers lenders and staircasing.

First Homes is still open according to gov.uk in September 2026. It lets first-time buyers in England buy a new home at 30% to 50% below market value, with household income capped at £80,000, or £90,000 in London, and a mortgage needed for at least half the price. The catch is supply. The national rule that a quarter of affordable housing on new sites should be First Homes was removed in December 2024, and reported completions run to only a few hundred a year, so treat it as a bonus if a local site offers one, not a plan. Help to Buy equity loans closed to new applications in 2022 and are not available.

How much stamp duty do first-time buyers pay on a new build?

First-time buyers in England and Northern Ireland pay no stamp duty on the first £300,000 of a home costing up to £500,000, and 5% on the portion between £300,001 and £500,000. New builds are taxed exactly like any other home. Above £500,000, first-time buyer relief is lost entirely and standard rates apply to the whole price. Developers sometimes offer to “pay your stamp duty”, but for most first-time buyers there is little or none to pay, so that incentive is worth less than it sounds. Full detail is in our stamp duty for first-time buyers guide.

Rates from 1 April 2025 per gov.uk. Standard rates: 0% to £125,000, 2% to £250,000, 5% to £925,000. Scotland and Wales use LBTT and LTT with different bands.

What should you check at snagging and before completion?

Snagging is the inspection of a new build for defects before or just after you complete, and it is the buyer’s best leverage to get problems fixed. Common snags include poorly fitted doors and windows, paint and plaster defects, missing sealant, and heating or electrical faults. You can do it yourself or pay a professional snagging surveyor, and the report goes to the developer’s customer care team to fix under the two year builder period.

For the mortgage, the key moment is the developer’s notice that the home is complete. The lender will not release funds until the property is finished and signed off by the warranty provider, and some lenders ask the valuer to re-inspect a home that was valued under construction. Keep an eye on your offer expiry date here: if the build slips and the offer lapses before the final sign-off, you are into an extension or reapplication. Book your snagging inspection for the week the developer gives notice, so issues are logged before you move in.

Why do new build mortgage applications get declined?

Most new build declines come from the property and the paperwork, not the buyer. Income and credit are assessed as normal, so the new build specific failures are predictable and nearly all can be avoided if the lender is chosen with the property in mind.

Knox case: first-time buyers and a new build flat

Illustrative case based on the type of new build work we handle; details changed to protect client confidentiality.

A first-time buyer couple in Salford reserved a two bed new build flat at £230,000 with a £23,000 deposit, a 10% deposit and a £207,000 loan at 90% LTV. Their bank’s own mortgage adviser had quoted them a rate, but that bank capped new build flats at 85%, which would have needed £34,500 down. They came to us with 26 days left before the developer’s exchange deadline.

We placed the case with a lender that allows 90% on new build flats and checked the developer’s Disclosure Form before submission. It listed £6,000 of cash towards legal fees and a £3,000 flooring package, 3.9% of the price and inside the 5% ceiling. The valuation came back at the purchase price. The build then slipped by eight weeks, so we tracked the offer expiry against the developer’s updated completion date and requested an extension before the deadline rather than after it. They completed within the extended offer period without reapplying.

How Knox Mortgages helps with new build purchases

Knox Mortgages is a whole-of-market broker, which matters on new builds more than almost anywhere else, because lender rules on flats, incentives, offer length and warranties differ so widely. We match the lender to the property before you reserve, check the Disclosure Form against the lender’s incentive rules, and track the offer expiry against the build programme so it does not lapse. If you are buying your first home, start with our first-time buyer mortgage guide.

New build mortgage FAQs

Is it harder to get a mortgage on a new build?

Not for a house, but it can be for a flat. Your income and credit are assessed as normal. The extra hurdles are property based: most big lenders cap new build flats at 85% LTV, incentives are capped at around 5% and the home needs an accepted warranty. Choosing the right lender before you reserve removes most of the difficulty.

Can you get a 95% mortgage on a new build?

Yes on a house, and sometimes on a flat. Nationwide, Halifax, Barclays, NatWest and Santander all lend up to 95% on new build houses in September 2026, subject to product availability. For flats, Santander allows 95% on loans up to £380,000, NatWest allows 90% and Nationwide, Halifax and Barclays cap at 85%.

Are mortgage rates higher on new builds?

Usually no. Most lenders price new builds on their standard rates for the same loan to value. The cost difference comes from LTV: a flat buyer forced from 90% to 85% may get a better rate but needs a much bigger deposit. A handful of lenders run new build only products with longer offer periods, which can be worth more than a small rate saving.

How long is a new build mortgage offer valid?

Usually 6 to 9 months. Barclays and NatWest give 6 months with extensions on request, Barclays for up to a further 6 months. Nationwide gives 9 months with no extensions. Santander gives 9 months on new build only products and only considers extensions in the last two weeks.

What is the maximum developer incentive a lender will accept?

Around 5% of the price at most lenders. Nationwide and Santander cap cash incentives at 5%, and Nationwide accepts no financial incentives above 90% LTV. Barclays accepts more than 5% but deducts the excess from the valuation, which reduces the maximum loan.

Do I need to see the UK Finance Disclosure Form?

You should. The developer completes it and your conveyancer sends it to the lender, but it is the single document that decides how incentives affect your loan. Ask for a copy when you reserve and check the price and every incentive match what you agreed.

What happens if a new build is valued below the price?

The lender lends against the lower valuation, so you cover the gap in cash, renegotiate the price or withdraw. On a £300,000 purchase at 95%, a valuation of £288,000 cuts the maximum loan to £273,600 and adds £11,400 to the cash you need.

Can I use my own broker instead of the developer’s?

Yes. Developers often recommend an in-house or panel broker, but you are not obliged to use them, and developers signed up to the New Homes Quality Code should not pressure you into doing so. An independent whole-of-market broker works for you, not the developer’s sales target, which matters when the question is whether an incentive or valuation is in your interest.

Speak to a new build mortgage broker

If you have found a new build or you are about to reserve, book a call before you pay the reservation fee. We will check the property type, incentives and completion date against the lenders that fit, and tell you exactly what deposit you need.

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