Heron Financial arranged a £315,000 mortgage with Barclays at an initial fixed rate of 4.00% on a 5-year fix for a solo first-time buyer purchasing a £371,000 purpose-built new flat in London. The £55,000 deposit was made up of a £18,000 builder gift from the developer (5% of the purchase price) and £37,000 of personal savings, placing the loan at 85% LTV. The case completed in December 2025.
The client
The client was a British first-time buyer in a PAYE employed role with a £66,000 annual salary, buying solo. They were targeting a purpose-built new flat in London, with the developer offering a deposit contribution as part of the sale incentive. The client had built £37,000 of personal savings to complement the builder gift, giving a combined £55,000 deposit on the £371,000 purchase price.
The case at a glance
- Buyer: Solo first-time buyer, British national, employed (PAYE)
- Income: £66,000 annual salary
- Property type: Purpose-built new flat
- Location: London
- Purchase price: £371,000
- Deposit: £55,000 total (£18,000 builder gift + £37,000 personal savings) (~15%)
- Loan amount: £315,000
- LTV: Approximately 85%
- Lender: Barclays
- Product: 5-Year Fixed Rate
- Initial fixed rate: 4.00%
- Repayment method: Capital and interest
The challenge
Two features shaped this case.
1. Builder deposit contribution. New build developers regularly offer incentives to buyers, including deposit contributions, cashback, stamp duty paid, fitted goods or furniture packages. Mortgage lenders treat these incentives carefully. Most lenders accept builder deposit contributions up to 5% of the purchase price.
Above that, the incentive is typically deducted from the purchase price for the lender’s LTV calculation, which effectively reduces the loan-to-value the borrower is allowed to borrow against. In this case, the £18,000 builder gift sat at exactly 5% of the £371,000 purchase price, the standard mainstream lender limit, so the incentive worked cleanly within the lender’s policy without affecting the headline LTV.
For first-time buyers considering new builds with developer incentives, understanding this mechanic matters. A “free” deposit contribution from the developer isn’t always treated as additional borrowing capacity. Some lenders accept it as part of the deposit; others reduce the effective property value used for the LTV calculation. The right lender choice depends on the size of the incentive and the specific policy.
2. First-time buyer at 85% LTV. 85% LTV sits in a busy lender bracket where most major UK lenders compete actively. For First time buyers, the choice of lender, product term and rate has a meaningful impact on the first few years of homeownership. With a clean income picture and a sensible deposit make-up, the case fundamentals were strong, which moved the conversation to placing the case with the lender offering the best fit on rate, criteria and service.
Barclays accepted the builder deposit contribution within its standard new build lending criteria and offered a competitive 5-year fixed rate at 4.00%. The 5-year term gives the FTB a long stretch of payment certainty, which suits buyers wanting predictable monthly costs through the early years of homeownership.
How Heron Financial approached the recommendation
The Heron adviser worked through affordability against the client’s recorded £66,000 salary, confirmed the deposit position with the builder gift at exactly 5% of the purchase price (within standard lender limits), and matched the case to a lender comfortable with new build flats, first-time buyer purchases at 85% LTV and builder deposit contributions. With the client wanting medium-term payment certainty, Heron Financial recommended Barclays on a 5-year fixed rate at 4.00%.
The outcome
The case completed in December 2025. The client moved into the new London flat with a fixed monthly payment locked in for the next five years.
What this means for buyers in a similar position
For first-time buyers considering new builds, the builder incentive landscape is one of the most important parts of the buying process to understand. A few practical points worth knowing.
Builder deposit contributions are a real and common feature. Most major developers offer some form of incentive to push sales. Deposit contributions are common, particularly toward year-end or for specific plots the developer wants to move.
The 5% threshold matters. Most mainstream lenders accept builder deposit contributions up to 5% of the purchase price without adjusting the LTV calculation. Above 5%, the incentive is typically deducted from the purchase price for the lender’s purposes, which reduces the effective borrowing.
Different lenders have different policies. Some lenders are more accepting of incentives than others. Some require the incentive to be evidenced in specific ways. Working with a broker who knows which lenders accept which structures matters for placement.
New build flats are well-treated by most major lenders. Lender appetite for new build flats is generally good, though specific developments may face checks on building safety paperwork, leasehold terms or service charge arrangements. Modern new build flats typically have long leases and clean management structures.
FTBs benefit from medium-term payment certainty. A 5-year fix at the start of homeownership locks in predictable monthly costs through the most financially demanding early years of owning. The trade-off is reduced flexibility within the term. The right product depends on the FTB’s specific plans.
FAQs
Can I use a builder gift as part of my deposit?
Yes. Most mainstream lenders accept developer deposit contributions up to 5% of the purchase price as part of the deposit. In this Heron Financial case, the FTB used a £18,000 builder gift (exactly 5% of the £371,000 purchase price) alongside £37,000 of personal savings to make up the deposit.
How does Barclays treat new build builder incentives?
Barclays is one of the major UK mainstream lenders and is regularly considered for new build purchases including those with builder deposit contributions within standard limits. Heron Financial assesses every case on its merits and selects a lender based on affordability, product pricing, criteria fit and service standards at the time of application.
What's the maximum builder incentive lenders accept?
Most mainstream lenders accept builder deposit contributions up to 5% of the purchase price without adjusting the LTV calculation. Above that level, the incentive is typically deducted from the purchase price for the lender’s LTV purposes, which can reduce the effective borrowing.
Is a 5-year fix a good choice for first-time buyers?
A 5-year fix gives a long stretch of payment certainty, which suits FTBs who want predictable monthly costs through the early years of homeownership. The trade-off is reduced flexibility within the term. Heron Financial recommends the term that fits the buyer’s plans, not a default option.
What deposit do I need as a first-time buyer in London?
It depends on the property and the lender. A 5% deposit gets to 95% LTV; a 10% deposit, 90%; a 15% deposit (as in this Heron Financial case), 85%. Builder deposit contributions on new builds can supplement personal savings within lender limits.
