Problem 1: Down-Valuation
The lender's valuer says the property is worth less than the purchase price you agreed with the developer.
Why It Happens
| Cause | Detail |
|---|
| Limited comparable sales | On a new development's first phase, there are no completed sales to compare against. The valuer must estimate. |
| Developer pricing above market | Developers price based on target margins, not necessarily local market comparables. |
| Market movement | If prices have fallen since you reserved (which could be months earlier), the valuation reflects current values. |
| Incentive inflation | Developer offers large incentives but inflates the purchase price to compensate — valuer sees through this. |
| Desktop valuation limitations | Remote valuations may undervalue without seeing the actual property and location. |
Worked Example
| Item | Expected | After Down-Valuation |
|---|
| Purchase price | £300,000 | £300,000 |
| Valuation | £300,000 | £280,000 |
| Mortgage at 90% LTV | £270,000 | £252,000 (90% of £280,000) |
| Deposit needed | £30,000 | £48,000 (£300,000 − £252,000) |
| Additional funds required | — | £18,000 |
A £20,000 down-valuation means you need £18,000 more in deposit. This is the most financially impactful mortgage problem for new build buyers.
Solutions (in Order of Preference)
| Option | How It Works | Success Rate |
|---|
| 1. Negotiate price reduction with developer | Ask developer to reduce price to the valuation figure. They may agree, especially on slow-selling plots. | Moderate — depends on market conditions and developer's position |
| 2. Appeal the valuation | Your broker provides additional comparable evidence to the lender. Lender may instruct a second opinion. | Moderate — works best when genuinely good comparables exist |
| 3. Switch lenders | Different lender uses different valuer who may value higher. Your broker handles the new application. | Good — different valuers regularly reach different conclusions |
| 4. Increase your deposit | Find additional funds to cover the shortfall — savings, gifts from family, or other sources. | High — if funds available |
| 5. Reduce incentives | If developer incentives are inflating the price, negotiate to remove incentives and reduce price instead. | Good — cleaner price may value better |
| 6. Split the difference | Negotiate with developer to split the shortfall — they reduce price by half, you increase deposit by half. | Good — both parties compromise |
| 7. Walk away | If you haven't exchanged, withdraw and get your reservation fee back (if terms allow). If you have exchanged, you risk losing your deposit. | Last resort — check contract terms |
Problem 2: Mortgage Offer Expiry
Your mortgage offer runs out before the new build is ready to complete.
Why It Happens
| Cause | Detail |
|---|
| Build delays | Construction runs behind schedule due to weather, supply chain issues, labour shortages, or planning complications. |
| Short offer validity | Standard 6-month offer wasn't long enough for the build timeline. No extension was requested in time. |
| Poor timing of application | Buyer applied too early, burning through offer validity before completion was realistic. |
| Developer's notice period | Developer gives only 10–14 days' notice of completion — if offer expires between notice and completion, there's no time to renew. |
What It Costs
| Scenario | Financial Impact |
|---|
| Rates unchanged, same lender renews | New valuation fee (£150–£350) + processing time (2–4 weeks) |
| Rates have risen 0.5% | New rate costs £65–£80/month extra on a £250,000 mortgage = £3,900–£4,800 over 5-year fix |
| Rates have risen 1% | New rate costs £130–£160/month extra = £7,800–£9,600 over 5-year fix |
| Affordability criteria tightened | May be offered less — could need larger deposit or cheaper property |
| Application declined on resubmission | Cannot complete — risk losing deposit if already exchanged |
Solutions
| Option | How It Works | When to Act |
|---|
| 1. Request extension | Contact lender (via broker) to extend offer. Many grant 3–6 months for new builds, sometimes at original rate. | As soon as you suspect completion will be delayed — don't wait until expiry. |
| 2. Reapply with same lender | Submit fresh application. May get different rate and need new valuation. | If extension refused |
| 3. Switch to different lender | Broker finds lender with longer validity or better current rate. | If current lender's new rate is uncompetitive |
| 4. Request developer delays completion | If delay is developer's fault, ask for time to arrange new mortgage. | Immediately when you learn of delay |
Prevention: Choose a lender with the longest new build offer validity that covers your expected completion date plus 3 months buffer. See our mortgage process guide for timing strategies.
Problem 3: Developer Incentive Complications
The developer's incentives push you over the lender's incentive cap, reducing the effective valuation and increasing your required deposit.
How the Incentive Cap Works
| Your LTV | Maximum Incentive (% of Purchase Price) | On £350,000 Property |
|---|
| Up to 75% | 5% | £17,500 |
| 75.1%–85% | 5% | £17,500 |
| 85.1%–90% | 5% | £17,500 |
| 90.1%–95% | 5% | £17,500 |
What Counts as an Incentive
| Incentive | Counts Towards Cap? | Notes |
|---|
| Stamp duty paid by developer | Yes | Full SDLT amount counts |
| Cashback on completion | Yes | Cash amount counts |
| Furniture/white goods package | Usually yes | Valued at cost to developer |
| Upgraded kitchen/bathroom | Sometimes — depends on lender | Standard upgrades may not count. Premium upgrades usually do. |
| Flooring/carpeting included | Sometimes | If it would normally be an extra, it counts |
| Garden landscaping | Sometimes | Basic landscaping often excluded; premium landscaping counts |
| Legal fees contribution | Yes | Solicitor fee contribution counts towards cap |
| Part-exchange premium | May count | If developer pays above market value for your existing home, the premium may count as an incentive |
Worked Example: Incentives Exceeding the Cap
| Item | Amount |
|---|
| Purchase price | £350,000 |
| Stamp duty paid by developer | £7,500 |
| Upgraded kitchen | £5,000 |
| Flooring package | £3,500 |
| Legal fees contribution | £1,500 |
| Cashback | £2,000 |
| Total incentives | £19,500 (5.57% of purchase price) |
| Cap at 5% | £17,500 |
| Excess over cap | £2,000 |
When incentives exceed the cap, many lenders reduce the property valuation by the full incentive amount (£19,500), not just the excess. The property is valued at £330,500. At 90% LTV, the lender offers £297,450 instead of £315,000 — a £17,550 shortfall you must cover with additional deposit.
Solutions
| Option | How It Works |
|---|
| 1. Reduce incentives to stay within cap | Remove the lowest-value incentives to bring total below 5% |
| 2. Negotiate price reduction instead | Ask developer to reduce price by equivalent amount rather than giving incentives — a lower price doesn't trigger the cap |
| 3. Change which incentives you take | Some items (e.g., basic landscaping) may not count towards the cap — restructure the incentive package |
| 4. Increase your deposit | Cover the shortfall with additional funds |
| 5. Find a lender with more favourable incentive treatment | Some lenders are more flexible about what counts — your broker can advise |
For more on how incentives affect your affordability, see our affordability guide.
Problem 4: Lender Restrictions on New Build Type
Your chosen lender won't lend on your specific new build property.
Common Restrictions
| Restriction | Why Lenders Apply It | Properties Affected |
|---|
| New build flat LTV cap (85%) | Flats are perceived as higher risk — slower to sell, potential cladding/fire safety issues | All new build flats from some lenders |
| High-rise restriction (above 5th floor) | Resale concerns, potential EWS1 issues on taller buildings | New build flats above 5th or 10th floor depending on lender |
| Non-standard construction | Timber frame, modular, SIPs, or other modern methods of construction not yet proven at scale | Varies — some lenders exclude specific construction types |
| Developer not approved | Lender maintains a list of approved/registered developers for quality assurance | Smaller or newer developers not yet registered |
| Warranty provider not accepted | Lender only accepts specific warranty providers (e.g., NHBC, Premier Guarantee, LABC) | Properties with lesser-known warranty providers |
| Minimum property size | Some lenders set minimum square footage (typically 30m²) | Studio flats and very small 1-bed apartments |
| Maximum number of units | Lender won't lend if development exceeds a certain number of units (or % of units already mortgaged by same lender) | Large developments where one lender dominates |
Solutions
| Option | How It Works |
|---|
| Switch lender | Your broker finds a lender that accepts your property type. Building societies are often more flexible. |
| Ask developer to register | If the issue is developer approval or warranty provider, ask the developer to register with a more widely accepted body. |
| Increase deposit | If the issue is LTV cap (e.g., 85% max on flats), a larger deposit solves it. |
| Request EWS1 form | For fire safety concerns, the developer may need to provide an EWS1 assessment. |
| Specialist lender | Specialist or manual underwriting lenders consider properties on a case-by-case basis. |
Problem 5: Lease Terms Rejected by Lender
The lender refuses to lend because the leasehold terms don't meet their criteria — even though the property is brand new.
Common Lease Issues
| Issue | Lender Requirement | What Goes Wrong |
|---|
| Ground rent too high | Must be peppercorn (effectively nil) for post-June 2022 leases under the Leasehold Reform Act. For older leases, must not exceed 0.1% of property value. | Pre-2022 leases with escalating ground rent clauses. Doubling clauses are unmortgageable. |
| Lease too short | Most lenders require minimum 70–85 years remaining at end of mortgage term | Rare on new builds (usually 125–999 years) but check the actual lease length |
| Restrictive management company | Lender checks management company is properly constituted and reasonable | Unclear management company structure, no residents' right to manage, unfair charges |
| Onerous clauses | No unreasonable restrictions on sale, subletting, or use | Clauses requiring developer consent for sale, or excessive consent fees |
| Event fees / permission fees | Some lenders reject leases with fees triggered by sale, remortgage, or alterations | Administration fees of £200–£500 on each transaction |
Solutions
| Option | How It Works |
|---|
| Developer amends lease | Your solicitor raises the issue with the developer's solicitor. Developer should amend the lease to meet UK Finance Handbook requirements. This is the correct solution. |
| Find a more flexible lender | Some lenders have less strict lease requirements. Your broker can identify them. |
| Negotiate removal of problematic clause | Specific clauses (event fees, consent requirements) can sometimes be removed by deed of variation. |
For a comprehensive guide to lease issues, see our legal pitfalls guide and contract checking guide.
Problem 6: Mortgage Declined After DIP Was Approved
You received a Decision in Principle, reserved a plot, but the full application was declined.
Why This Happens
| Reason | Detail |
|---|
| DIP used a soft credit search | Full application reveals adverse credit not visible on the soft search |
| Circumstances changed | New debt, job change, missed payment, or other change between DIP and full application |
| Income verification failed | Declared income doesn't match payslips or SA302 — overtime/bonus lower than stated |
| Bank statements raised concerns | Gambling transactions, payday loans, undeclared debts, or unexplained deposits |
| Property-specific issues | Lender won't lend on this specific property type, developer, or lease terms |
| Automated scoring | Lender's internal credit model scored you below threshold despite meeting basic criteria |
Solutions
| Step | Action |
|---|
| 1 | Ask your broker (or lender) for the specific reason for decline |
| 2 | If credit-related: check your credit file immediately for errors or unknown issues |
| 3 | If income-related: gather correct documentation and apply with a lender whose criteria match your actual income |
| 4 | If property-related: switch to a lender that accepts your property type |
| 5 | If automated scoring: try a lender with manual underwriting (typically building societies) |
| 6 | Do not apply to multiple lenders quickly — each hard search reduces your score further |
A decline is not the end. Different lenders have different criteria. Your broker should know where to reapply based on the decline reason. See our affordability guide for tips on improving your application.
Problem 7: Completion Date Moves and Mortgage Timing Fails
The developer brings completion forward or pushes it back, creating a timing mismatch with your mortgage.
Scenarios and Solutions
| Scenario | Problem | Solution |
|---|
| Completion brought forward by 2–4 weeks | Mortgage funds may not be ready. Solicitor needs time to requisition funds from lender. | Inform your solicitor and broker immediately. Most lenders can expedite fund release within 5–10 working days of request. |
| Completion brought forward significantly (2+ months) | Searches may not be complete. Solicitor may not have finished contract review. | Ask developer for reasonable notice. Push back if not ready — Consumer Code requires adequate notice. |
| Completion delayed 1–3 months | Mortgage offer still valid but approaching expiry. | Contact lender for extension. Start extension process before expiry date. |
| Completion delayed 3–6+ months | Mortgage offer likely expires. Rates may have changed. | Reapply with same or different lender. Budget for potentially different rate. Check contract for longstop date rights. |
| No completion date given (open-ended) | Cannot time mortgage application properly. | Get written estimated completion date from developer. Apply when 6 months from expected date. Choose lender with longest validity. |
Problem 8: Negative Equity Risk on New Builds
New builds can lose value shortly after purchase due to the "new build premium," creating negative equity.
How the New Build Premium Works
| Factor | Detail |
|---|
| What it is | New builds often sell at a 10–20% premium over comparable resale properties in the same area |
| Why it exists | Developer margins, marketing costs, and the "new" factor are built into the price |
| What happens when you sell | Your property becomes "second-hand" and is compared to resale prices, not new build prices |
| Typical premium erosion | 5–15% drop in value over first 1–3 years, then recovers with market growth over 5–10 years |
| Mortgage impact | If you bought with a 10% deposit and the property drops 15%, you're in negative equity — mortgage exceeds property value |
Negative Equity Consequences
| Situation | Impact |
|---|
| Want to remortgage | Limited or no options — current lender may offer product transfer at higher rate |
| Want to sell | Must repay mortgage in full — shortfall comes from your savings |
| Want to move | Cannot move without selling or having funds to clear the shortfall |
| Stay and keep paying | No immediate problem — you only crystallise the loss if you sell |
Mitigation Strategies
| Strategy | How It Helps |
|---|
| Larger deposit (15%+) | Creates a buffer against value drops. 15% deposit means property can drop 15% before you're in negative equity. |
| 5-year fix or longer | By the time you need to remortgage, the market has typically recovered. |
| Regular overpayments | Reduces your mortgage balance faster, building equity to offset any value drop. |
| Don't overpay for the property | Negotiate on price where possible. Avoid accepting incentives that inflate the headline price. |
| Buy in an area with strong demand | High-demand areas see faster price recovery after any initial premium erosion. |
Problem 9: Lender Withdrawal After Exchange
The most serious scenario: you've exchanged contracts (legally committed) and the lender withdraws the mortgage offer.
Why This Can Happen
| Reason | Detail |
|---|
| Fraud or misrepresentation detected | Lender discovers income was overstated, debts undeclared, or deposit source misrepresented |
| Material change in circumstances | Job loss, significant new debt, or relationship breakdown after offer but before completion |
| Property issue discovered | Solicitor's report reveals title problem, missing warranty, or unacceptable lease clause |
| Lender policy change | Rare, but lenders can change criteria affecting already-offered mortgages (usually only in extreme market conditions) |
| Valuation re-inspection fails | If re-inspection on completion reveals issues (e.g., property not built to specification) |
What's at Stake
| If You Can't Complete | Consequence |
|---|
| Exchange deposit | Lost — typically 10% of purchase price (£25,000–£50,000 on most new builds) |
| Developer can sue | Developer can claim the difference between your contract price and what they eventually sell for |
| Additional costs | Solicitor fees, search fees, and other costs already paid are non-recoverable |
Emergency Solutions
| Option | How It Works | Speed |
|---|
| 1. Emergency re-application | Broker submits urgent application to alternative lender. Some offer fast-track for exchanged buyers. | 2–4 weeks if straightforward |
| 2. Bridging loan | Short-term (1–12 month) loan to complete the purchase while arranging a standard mortgage. | Can be arranged in days. Expensive — 0.5–1.5% per month interest. |
| 3. Family loan | Borrow from family to complete. Arrange formal mortgage afterwards. | Depends on family — potentially immediate |
| 4. Developer negotiation | Ask developer for time extension to arrange alternative finance. Developer may agree to avoid the cost of reselling. | Depends on developer goodwill |
| 5. Legal advice | If withdrawal is due to lender error or breach, solicitor may advise on compensation claim against lender. | Months — not a quick fix |
Prevention: Never misrepresent anything on your mortgage application. Disclose all changes in circumstances immediately. Use a broker who thoroughly checks your application before submission.
Problem 10: Porting Problems When Buying New Build
You want to take your existing mortgage rate to the new build (porting) but encounter complications.
| Porting Issue | Why It Happens | Solution |
|---|
| Lender doesn't allow porting to new builds | Some lenders restrict porting to resale properties only | Check porting terms before reserving. If restricted, consider paying ERC and taking a new mortgage if the saving justifies it. |
| Need to borrow more (top-up) | New build costs more than current property — you need additional borrowing on top of the ported amount | Top-up is usually at current rates, not your ported rate. Calculate whether porting + top-up is cheaper than one new mortgage. |
| Timing mismatch | You sell your current home before the new build completes (or vice versa) | Lender may allow temporary "porting window" (usually 30–90 days) between selling old and completing new. |
| Affordability re-assessment | Porting requires a fresh affordability check — you might not pass at the higher loan amount | If you fail, you may need to take a new mortgage at market rate and pay ERC on your current deal. |
| New build LTV restriction blocks porting | Ported amount + top-up exceeds lender's new build LTV cap | Increase deposit or consider a different lender (paying ERC if necessary). |
Problem 11: Self-Build and Custom Build Complications
If you're buying a custom build or self-build new home, standard mortgages may not work.
| Issue | Detail | Solution |
|---|
| Standard lenders won't lend | Most mortgage products require a completed, habitable property | Use a self-build mortgage — funds released in stages as build progresses |
| Stage payments needed | You need to pay the builder at various construction stages | Self-build mortgages release funds at foundation, wall plate, wind/watertight, and completion stages |
| Valuation at each stage | Lender requires valuation confirmation at each stage before releasing funds | Budget for multiple valuation fees (£150–£300 each) |
| Higher interest rate | Self-build rates are typically 0.5–1% higher than standard mortgages | Convert to standard mortgage once property is complete to access better rates |
| Warranty requirement | Lender needs structural warranty even on self-build | Arrange warranty through NHBC, Premier Guarantee, or approved inspector before starting |
Problem 12: Help to Buy Complications (Legacy)
Although Help to Buy (England) closed to new applications in 2022/2023, buyers who used the scheme face ongoing mortgage complications.
| Issue | Detail | Solution |
|---|
| Equity loan repayment due | Government equity loan (20–40%) begins charging interest after year 5. Must be repaid on sale or after 25 years. | Remortgage to repay the equity loan, or repay from savings. Note: equity loan is a % of current value, not original price. |
| Remortgage restricted | Need permission from Homes England to remortgage while equity loan is outstanding | Apply to Homes England for consent. Allow 4–8 weeks for approval. |
| Can't find lender | Fewer lenders offer products compatible with outstanding Help to Buy equity loans | Use a broker experienced with Help to Buy remortgages |
| Negative equity with equity loan | If property value has fallen, the equity loan % remains — could owe more than property is worth | The equity loan is a percentage of current value, so it does reduce if value falls. But combined with mortgage, total debt could exceed value. |
For more on Help to Buy, see our Help to Buy explained guide.
Quick Reference: Problems and First Steps
| Problem | First Step | Who to Contact |
|---|
| Down-valuation | Ask broker to appeal or find alternative lender | Broker |
| Offer expiry | Request extension before it expires | Broker → lender |
| Incentive cap exceeded | Restructure incentive package with developer | Developer sales team + broker |
| Property type restricted | Switch to lender that accepts your property type | Broker |
| Lease terms rejected | Ask developer to amend lease | Solicitor → developer's solicitor |
| Application declined | Get decline reason, apply to suitable alternative | Broker |
| Completion date moved | Inform broker and solicitor immediately | Broker + solicitor |
| Negative equity concern | Overpay mortgage, avoid selling short-term | Financial adviser |
| Lender withdrawal post-exchange | Emergency alternative application or bridging loan | Broker (urgent) |
| Porting blocked | Calculate ERC vs new mortgage savings | Broker |
Frequently Asked Questions
What is the most common mortgage problem with new builds?
Mortgage offer expiry is the most common issue. New build completion dates are inherently uncertain, and a standard 6-month offer can easily run out before the property is ready. Always choose a lender with extended new build offer validity and monitor the timeline closely with your broker.
Can I lose my deposit if my mortgage falls through?
If you haven't exchanged contracts, you lose the reservation fee (£500–£2,000) but not the full deposit. After exchange, failing to complete means losing your exchange deposit (typically 10% of purchase price) and potentially being sued by the developer for additional losses.
What should I do if my property is down-valued?
First, ask your broker to appeal with additional comparable evidence. If that fails, ask them to try a different lender whose valuer may assess differently. Simultaneously, open a negotiation with the developer on price. Down-valuations are not unusual and most can be resolved.
Can the developer help if my mortgage has problems?
Sometimes. Developers can amend lease terms, adjust incentive packages, reduce prices, extend completion deadlines, or recommend alternative lenders. They have a financial interest in you completing — an unsold property costs them money. Don't be afraid to ask for flexibility.
How do I avoid mortgage problems on a new build?
Use a whole-of-market broker experienced with new builds. Choose a lender with the longest offer validity. Declare all incentives honestly. Keep your finances stable between application and completion. Budget for a deposit 5% larger than the minimum. And read our guides on the mortgage process, affordability, and choosing the right product before you start.
Is it worth paying for a professional valuation to avoid down-valuation?
You cannot choose the lender's valuer, and paying for your own valuation doesn't guarantee the lender's valuer will agree. However, if you obtain a RICS valuation before applying, you can share it with your broker to choose a lender whose valuation criteria are likely to match. Some brokers do this proactively on higher-value or potentially problematic new builds.
