Head of Content
Mortgage Advisor & Director
What is an off-plan mortgage?
Buying off-plan means committing to buying a property before construction is complete.
The concept can be quite overwhelming at first as you will be placing your trust in the developer to deliver the project, and relying on drawings, visuals and floorplans to make your decision to purchase.
Once you've made a decision to buy your new home off-plan, the next step is to convince a mortgage lender to buy-in too. For many lenders, this is too much to ask, and they will shy away from off-plan lending. However, the good news is that there are specialist lenders in the area who will consider your application.
As a whole of market broker, at Teito our expert advisors have access to more than 20,000 mortgage deals, including some offered by specialist off-plan lenders. We have helped many people like you to get the best deal possible on their new home. Start comparing deals now by completing our simple online form; we promise to make your mortgage journey as stress-free and straightforward as possible.
What does it mean to buy off-plan?
When you commit to buy a home before the build is complete, you are purchasing off-plan. As you won't be able to visit the property, this will involve relying on provided documentation and visuals. Depending at what stage you sign up, you may have the opportunity to customise some aspects of the fixtures and finish.
If you buy off-plan, you may find that the price has increased by the time the project has completed, and buying early on also means you could negotiate the best plot.
When buying your new home off-plan, you are also likely to benefit from guarantees, for example, the National House Building Council’s (NHBC) 10-year warranty which covers structural issues. You may also be offered insurance, which can be useful as finding willing insurers for new builds can be a challenge.
To confirm your plot, you'll need to part with a deposit, typically at least 5% of the purchase price.
What are the downsides of buying off-plan?
When you buy a home off-plan, there are a few drawbacks and risks to be aware of.
- The property is likely to depreciate in value after you move in. Take a look at similar new build homes in the area on the market to try and gauge the amount.
- Beware of restrictive covenants which may be in place on the property or land; these could restrict your ability to extend the house or make other changes.
- If the property is a leasehold, this could affect the resale value of the property and also include service charges that increase over time. Make sure you understand the terms of the leasehold; your conveyancer will be able to advise.
Is buying off-plan a good idea?
Before taking the leap and buying a home off-plan, make sure you research the developer and try and find reviews from homeowners.
You can also visit the developers existing sites to get a feel for the quality and see how much they are selling for online. Your conveyancer should be able to confirm that the developer has appropriate insurance in place to protect your deposit in the event that the project is not completed.
If you're hoping to negotiate the price, the best time to do this is towards the end of the financial year when you may be offered a discount.
Can you get a Help to Buy Equity Loan for off-plan homes?
Yes, many off-plan developers will accept the Help to Buy Equity Loan Scheme. In fact, the scheme is only available for new build homes.
How to get a mortgage for an off-plan home
Your best chance of getting a great deal on an off-plan mortgage is by using a competent and experienced broker.
Not only will they be able to recommend suitable lenders and boost your chances of approval, but they will also be able to find the best rates. If you're ready to get started on your mortgage journey with Teito, complete our simple online form now and start comparing deals.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
