New builds are becoming so popular that a third of consumers (35%) are now willing to pay a higher price for the energy efficiency benefits of new builds.
For brokers, though, this can be a complex market. Construction delays are commonplace, requiring longer mortgage offer periods and brokers need to know each lender’s approach to builder incentives, which can adversely affect the loan to value (LTV), mortgage rates or even the odds of securing a mortgage with that lender. Understanding the various nuances is vital to successfully guide clients on their new build mortgage journey.
The importance of flexibility
An inevitable challenge brokers and buyers can face is construction delays and their impact on completion timelines. Not only is this frustrating for the customer, but it also makes things tricky for brokers tasked with managing customer expectations while sourcing flexible products with extendable offers.
Some new build lenders have a 12-month offer period, this often requires applying for an extension after six or nine months. At Coventry for intermediaries, we have a nine-month offer period, allowing brokers to apply for a three-month extension up to 30 days prior to the original offer expiring.
Buildings in the early stages are more susceptible to delays than those nearing completion, so brokers can mitigate complications by considering the stage of construction when choosing a lender.
Incentive schemes and rewards
Financial and non-financial incentives for new build deals such as cashback, kitchen refurbishments and fitted appliances, can significantly ease affordability. Prospective buyers looking for a more economical property with lower energy costs are further incentivised by the in-built energy efficiency of many new build properties, with some boasting up-to-date boilers and heat pumps, purpose-built solar panels, water-saving devices and more.
However, some lenders are more likely to accept certain levels and types of incentives than others. Our new build proposition at Coventry for intermediaries includes the flexibility to accept financial incentives from the builder of up to 10% of the purchase price.
By finding out what the customer has agreed to, brokers can maximise sourcing systems and lender relationships to determine which mortgage providers will be most inclined to lend against these circumstances.
High levels of service are fundamental
Given the high possibility of completion delays and other challenges, finding a lender with a demonstrable history of great service is crucial.
In certain cases, brokers may need to make direct contact with lenders in addition to utilising sourcing systems. Some lenders have dedicated teams who offer support and expert guidance specifically for new build cases, providing swift responses for related broker queries.
Finally, brokers are well equipped with the knowledge and expertise required to secure the best possible outcome for their clients. By combining this with an understanding of each client’s individual circumstances, from financial situation to personal long-term goals, brokers will be in a strong position to identify the right lender to meet these needs, especially with the increasing popularity of new build properties.
