Barclays' definition of a 'new build' is a property that was first registered 2 or less years ago OR the property is subject to first sale by the developer, regardless of time or any rental usage in the interim. This also applies to newly converted properties. Maximum LTV is 90% for houses and 85% for flats and maisonettes. For remortgaging or additional borrowing the maximum LTV is also 85%.
Builder’s cash incentives are acceptable as part funding of the deposit provided that the following are met:
- The maximum amount of any builder’s cash incentive is capped at 5% of the lower of the full purchase price or valuation
- A maximum of 5% of the full purchase price (or valuation if lower) can therefore be funded by a builder’s cash incentive with the remaining deposit being sourced from the applicant’s own funds
- The deposit/cashback does not have to be repaid and the builder does not intend to register a charge against the property
- Deposit monies (including gifted deposits) must be controlled by the solicitor acting and must not be paid to the seller direct. Where this is not the case the application must be referred to Mortgage Fraud Prevention Team for review. The only exception to this is the payment of any reservation fee, that is less than 2% of the purchase price AND below £10,000 paid to reserve a plot, which can be paid direct.
- In all instances where there is an incentive (financial or non-financial), this should be disclosed to the valuer on the CML ‘Disclosure of Incentives’ form so that they can be taken into account when valuing the property
The following non-financial incentives are acceptable:
- White goods (where not included as standard specification)
- Floor coverings
- Integrated lighting (downlighters)
- Kitchen upgrade, including tiling and worktop
- Bathroom upgrade
- All electric upgrade – ie additional sockets, TV points, etc
- PV (photovoltaic) panels
Please note alternate deposit/incentive requirements apply to the Help to Buy scheme. Please see its individual policy page for further information.
A mortgage offer is valid for a 6 month period from the date the mortgage application is received by our teams.
Purchases on new build properties are often agreed off plan or in the early stages of developmentand completion may take longer than 6 months. Any original offer that does not complete in the 6 month offer validity period may be extended for a further 6 months without re-submitting status documentation and a re-valuation of the property. This will be subject to receiving confirmation that there has been no material change to the customer(s) circumstances since the original application was submitted using the New Build Mortgage Offer Extension Declaration form and the application being assessed against current lending standards with a refreshed credit search. If there has been a material change to the customer(s) circumstances, then a full underwriting assessment must be carried out including a status assessment and possibly selection of a new product. All costs involved will need to be covered by the customer.
If completion has not taken place 6 months from the date of original valuation a reinspection will be required. The applicant must cover the cost of this.
Please be aware that if a customer already owns a property (and they are not selling that property) then our maximum LTV is 80%. Under specialist schemes like Help to Buy a customer will be unable to purchase a new property if they own any other properties (be they residential, BTL or held on Permission to Let) in the background.
Sub-Sales and Reassignment of Sale Contracts
Sub-sales or reassignment of sale contracts/leases occur where a new-build property is currently contracted for a sale to a 3rd party which has yet to be completed. These are acceptable provided:
- The valuer instructed by the Bank is aware of the nature of the transaction
- The LTV is below 70% of the lower of purchase price or valuation
- The total mortgage lending is less than the contracted sale price being paid by the 3rd party
- All deposit funds are evidenced as being from the applicant’s own resources
- There is no family or other relationship between any applicant and the vendor or 3rd party
Any transaction not meeting all of the above criteria must be declined.