Nationwide is making it easier for people to take out mortgages on new build homes by making a ‘trio of changes’ to its products.
The mortgage lender is increasing the proportion it will lend on new build homes to 95% loan-to-value (LTV), meaning borrowers need just a 5% deposit to qualify for a new build loan. This option is also extended to first-time buyers.
For those taking their first step on the property ladder, Nationwide said prospective homeowners can also use it’s ‘Helping Hand’ initiative to make new build purchases up to the maximum LTV.
Helping Hand aims to help first-time buyers by allowing them to a borrow a little bit more – it offers them a loan for six times their income, as opposed to the usual 4.5 times income which is standard amongst lenders.
According to Nationwide, mortgage new build sales in 2024 were around a third lower than in the last full year of the government’s Help to Buy scheme in 2022.
It said deposit requirements and affordability challenges have played a major part in this and Nationwide’s latest changes will support the new build sector by tackling them.
Nationwide said it would also be increasing the maximum loan-to-value available for applications involving new build flats to 85%.
And it will be increasing its offer period for new build properties from six months to nine months. Whilst the majority of new build purchases complete within a six-month period, this change aims to offer customers and brokers greater certainty and flexibility during the construction process. The longer offer period reduces the risk of needing to reapply for the mortgage in the event the property takes longer to complete.
Henry Jordan, Nationwide’s director of home, said: “A strong housebuilding sector drives growth, and as the UK’s biggest building society, we’re backing it with a trio of positive changes.”
He added: “These changes have the potential to meet the strong first-time buyer demand for new builds that has gone unmet since the end of Help to Buy, whilst also stimulating the construction sector to build more homes with the confidence that buyers can get a mortgage on them.”
Ceri Pearce, UK sales and marketing director, Taylor Wimpey said: “Nationwide’s latest mortgage enhancements are a welcome step at a time when desire for home ownership is strong but affordability continues to challenge some customers – especially first-time buyers.
“The increase in the maximum loan to value on new build houses to 95% will make it easier for buyers to secure a mortgage with a smaller deposit, and the extension of mortgage offers to nine months will give borrowers greater certainty and flexibility during the construction process.
“These changes reflect a strong commitment to supporting the housing market and responding to the underlying demand for new homes.”
