Finding a perfect new build in London
We have broken down the home-buying process in London into five clear, sequential steps. Following this path helps you secure your finances, select the ideal property, and complete your purchase safely.
First, it is critical to establish a budget before starting any property hunt. Consider contacting a mortgage adviser and getting an Agreement in Principle (AIP), which is also known as a Decision in Principle (DIP). In addition, try mortgage calculators to see how much you can afford by yourself.
Saving for a Deposit
Typically, you need between a 5.0% and 20.0% deposit to secure a mortgage for a brand-new home. Consider reassessing your regular spending and outstanding debts when saving for a deposit, as lenders will scrutinise your bank statements to determine your borrowing capacity. Saving a larger deposit often unlocks lower mortgage interest rates, which helps keep your monthly repayments manageable.
Consider All Purchase and Ownership Costs
Buying a new property includes many additional upfront and ongoing costs, which must be factored into your financial plans. Beyond the purchase price, you should prepare for:
- Conveyancing and legal fees: Payment for a solicitor to handle the complex contract exchange and legal checks.
- Stamp Duty Land Tax (SDLT): First-time buyers often benefit from significant discounts or complete exemptions, but you should verify your tax liability early.
- Mortgage valuation and broker fees: Payments to secure your mortgage product.
- Service charges and ground rent: Annual costs for building maintenance, which apply to almost all leasehold properties. Note that while property maintenance is a considerable cost for current households, brand-new developments are far more energy efficient than secondary homes, helping you save on utility bills from day one.
Take Advantage of Affordable Buying Schemes
When looking for modern London new builds or browsing affordable flats in London, remember that there are several buying options designed to make homeownership more attainable:
- Shared Ownership: A popular part-buy, part-rent scheme that lets you purchase a share of a home (from 10.0% to 75.0%) and pay a subsidised rent on the rest. This significantly reduces your required deposit.
- Own New: A developer-backed initiative offering two pathways, which are the Rate Reducer (securing significantly lower mortgage interest rates for the first few years) and the Deposit Drop (allowing you to buy with just a 5.0% deposit).
- First Homes Scheme: A government programme offering new properties to local first-time buyers and key workers at a discount of 30.0% to 50.0% compared to market value.
- Help to Buy: While this equity loan scheme officially closed to new applications in 2023, you can read our historical guide to understand its past impact and how to manage outstanding loans.
Frequently Asked Questions
An Agreement in Principle (AIP), or Decision in Principle (DIP), is a written statement from a mortgage lender indicating how much they are willing to lend you based on a preliminary review of your income and credit score. It shows property developers and sellers that you are a serious buyer with verified buying power.
You typically need a deposit of at least 5.0% to 10.0% of the property's purchase price. While some developer schemes allow you to buy with a 5.0% deposit, raising a larger deposit (such as 15.0% or 20.0%) gives you access to competitive mortgage products with lower interest rates.
You should budget for legal fees (conveyancing) which range from £1,000 to £2,500, Stamp Duty Land Tax (if applicable), mortgage product fees (typically £999), property valuation costs, and moving expenses. If buying a flat, remember to factor in monthly service charges for building maintenance.
Yes, brand-new homes are significantly cheaper to run. Because they are built to modern construction standards with advanced insulation, double or triple glazing, and energy-efficient boilers, they consume much less energy. This can save you hundreds of pounds annually on utility bills compared to secondary market homes.
Own New Rate Reducer is a developer-backed initiative where the homebuilder pays a financial contribution (usually 3.0% to 5.0% of the purchase price) directly to your mortgage lender. The lender uses this lump sum to reduce your mortgage interest rate, resulting in lower monthly payments during the initial fixed period.
