New Build Remortgage

Why remortgage my new build property?

The main reason for any remortgage, whether or not it’s new build, is to secure a better deal. When you take a new mortgage, it might be fixed for a certain period of time. Two, three or five years are quite common. At the end of that period you’re going to revert to the standard variable rate, or another floating tracker rate that is often higher.

So it’s normal to approach us six months out from that point. Have a conversation with your advisor about what you might be able to do to avoid that standard variable rate and potentially secure yourself either a new fixed rate or a different product.

But also it allows you to consider other things. If you’ve built up some debt over the time that you’ve held that mortgage, you could potentially consolidate. If you want to make some home improvements, it’s often possible to borrow a little bit more on that new mortgage to allow that.

The ultimate goal for a broker is to get you debt free as soon as possible. As interest rates have risen, people are keen to pay down the mortgage more aggressively. We make sure the next product we take actually fits that goal.

Inflation decreases debt in real terms. In English, that means that over time your wages will rise, but the debt remains static. So in 10 or 20 years, your mortgage won’t feel as onerous as when you first bought. So it’s a good review point to see what’s going on in your life and if you want to increase or decrease costs. Make sure the mortgage works for you, not the other way around.

How does remortgaging for a new build house work? How long do you have to own a property before you can re-mortgage?

We will pick up with clients about six months out from your current product ending, because mortgage offers are valid for six months. If you do anything prior to that, the mortgage won’t be valid for long enough.

It gives us a good length of time to look at what’s going on in the market. If rates are going up, we can secure your product and safeguard against future rises. If the market’s flat or decreasing, we have a benchmark.

Most banks insist that you own the property for six months before remortgaging, but that’s not always the case. Some lenders can do a ‘day one’ remortgage. It might be that you bought a property through auction or with a bridging loan and you want to refinance quickly to get off of that arrangement. Some lenders will do that within that six month period.

With a new build, if you’ve bought with a small deposit, the property may not have grown in value in that time. If the market’s gone down a bit, it may be tougher to refinance. That’s something we can work through with you.

Conversely, if you had a long-term product or the market’s gone up, you’ll have increased the equity in the property. For every 5% deposit in a property, the interest rate decreases – so you might go down to that next bracket.

I was literally saying to a client today that if they could pay £1,500 off the mortgage, they would get a much lower interest rate. You may not want to do that, but it’s our job to highlight these points. We’re working for you to get the best possible outcome.

Can you remortgage a new build with no proof of income?

People’s circumstances do change. Usually it’s not that there’s no income, it’s that their income has fundamentally changed.

Whenever you remortgage and approach a new lender, you are effectively starting from scratch. It’s the same as if you were purchasing the home, so you need to prove you can afford it.

But perhaps you are a contractor now or you’ve set up a limited company. You might be working on a day rate or working overseas. The income is there, it’s just different and perhaps sometimes more complex.

Generally speaking, we can find a mortgage for most people. It just depends on the level of complexity as to the lender we speak to. You might have fewer options than with a straightforward employed income on a basic salary – which is what high street lenders see as standard.

In short, the answer is probably no, but there are often nuances to why we’re asked that question. If people’s circumstances have changed there is usually a different type of income that might be slightly trickier to prove.

Can I remortgage my new build property if I have bad credit?

Yes, but bad credit is so subjective. To some people, it’s missing a credit card payment, years ago, and to others its CCJs, defaults or even bankruptcy. In all of those situations, typically, we can find you a lender. It will be subject to your specific circumstances, level of deposit in the property, and also affordability.

Most high street lenders are probably more flexible than you think. You’d be surprised at what they will accept. Even if you have had something formal like a default or a CCJ, if that’s under £500 and outside of the last two years, most high street banks are quite comfortable.

If it’s under two years, banks need a specific licence to offer products. There are specialist lenders we tend to go to in those situations. So it doesn’t stop you getting a mortgage, just means you have to probably use a slightly different lender.

If anything was on your credit file more than six years ago, it simply falls off, like points on a driving licence.

Banks and lenders are ultimately businesses, and a lot of the time they’ve got shareholders to appease. The way that they make their money is by lending so they’re always looking to find a way to say yes. That’s why you see so much innovation in this space. So always have that conversation early because you might be surprised by the options that you’ve got.