Why Comparing Lenders Matters More for New Builds
New build purchases have lender-specific restrictions that don't apply to resale homes. Two lenders offering the same rate can give you a completely different experience.
| New Build Factor | How It Varies Between Lenders | Impact |
|---|---|---|
| Maximum LTV | Some cap at 85%, others allow 90%, a few 95% on new builds | Determines your minimum deposit requirement |
| Offer validity | 6 months (standard) to 12+ months (new build specialists) | Determines whether your offer survives build delays |
| Developer approval | Some require the developer to be on their approved list | Your preferred lender may not work with your developer |
| Property type restrictions | Some won't lend on new build flats, high-rise, or certain construction types | Eliminates entire lenders from your search |
| Incentive treatment | Different lenders deduct incentives differently from valuation | Affects your effective LTV and available rates |
| Valuation approach | Desktop vs physical inspection vs re-inspection required | Affects cost, timeline, and risk of down-valuation |
| Lease requirements | Ground rent thresholds, minimum lease length, management company rules | Some leases pass one lender's criteria but fail another's |
How to Read an ESIS (European Standardised Information Sheet)
Every lender must provide an ESIS when they make you a binding offer. This is the most important document for comparing deals — it uses a standardised format so you can compare like-for-like.
| ESIS Section | What It Shows | What to Check |
|---|---|---|
| 1. Lender identity | Full name and contact details of the lender | Confirm it's the lender you applied to, not a subsidiary or white-label |
| 2. Main features of the loan | Loan amount, term, total amount repayable | Total amount repayable is the key number — interest + capital + fees over full term |
| 3. Interest rate | Initial rate, type (fixed/variable), and what it reverts to | Check the reversion rate (SVR) and when it kicks in |
| 4. APRC (Annual Percentage Rate of Charge) | Total cost of borrowing including fees, expressed as a percentage | Use this to compare deals — it's the only number that includes fees AND rate |
| 5. Frequency and number of payments | Monthly payment amount during initial period and after reversion | Check both the initial payment AND the reversion payment |
| 6. Amount of each instalment | Exact monthly payment breakdown | Confirm you can afford both the initial and reversion payments |
| 7. Illustrative repayment table | Year-by-year breakdown of balance, interest paid, and capital repaid | Shows how much interest you pay in total and how quickly balance reduces |
| 8. Additional obligations | Buildings insurance requirements, conditions to maintain | Check for unusual conditions (e.g., specific insurance provider required) |
| 9. Early repayment | ERC schedule and overpayment allowances | Critical if you might move, remortgage early, or want to overpay |
| 10. Complaints | How to complain and access the Financial Ombudsman Service | Standard information — same for all lenders |
| 11. Non-compliance consequences | What happens if you miss payments | Repossession process and fees that may apply |
The APRC is the single most useful comparison number, but it has a flaw: it assumes you'll stay on the mortgage for the full term at the reversion rate. Since most people remortgage before that, the APRC often overstates the true cost. The better comparison is the total cost over the initial deal period.
True Cost Calculation: The Only Comparison That Works
To properly compare two mortgage deals, calculate the total cost during the initial deal period only (the fixed or tracker period). This accounts for both rate AND fees.
The Formula
Total Cost = (Monthly Payment × Number of Months) + All Upfront Fees − Cashback
Worked Example: Comparing Three Deals on £250,000 / 25 Years / 85% LTV
| Item | Deal A: Low rate, high fee | Deal B: Mid rate, no fee | Deal C: Higher rate, cashback |
|---|---|---|---|
| Product | 5-year fixed at 4.25% | 5-year fixed at 4.45% | 5-year fixed at 4.55% + £500 cashback |
| Arrangement fee | £1,499 | £0 | £0 |
| Valuation fee | £0 (free) | £350 | £0 (free) |
| Monthly payment | £1,354 | £1,385 | £1,401 |
| Total payments over 5 years | £81,240 | £83,100 | £84,060 |
| Total fees | £1,499 | £350 | £0 |
| Cashback received | £0 | £0 | −£500 |
| True 5-year cost | £82,739 | £83,450 | £83,560 |
| Rank | 1st (cheapest) | 2nd | 3rd |
Deal A has the highest fee but the lowest total cost over 5 years. Deal C's cashback doesn't offset the higher rate. On this mortgage size, the £1,499 fee is worth paying for the lower rate.
When Fee-Free Wins
On smaller mortgages, the equation flips. Here's the same three deals on a £120,000 mortgage:
| Item | Deal A: Low rate, high fee | Deal B: Mid rate, no fee |
|---|---|---|
| Monthly payment | £651 | £666 |
| Total payments over 5 years | £39,060 | £39,960 |
| Total fees | £1,499 | £0 |
| True 5-year cost | £40,559 | £39,960 |
| Rank | 2nd | 1st (cheapest) |
On a £120,000 mortgage, the fee-free deal is £599 cheaper over 5 years. The cross-over point — where paying the fee becomes worth it — is typically around £150,000–£180,000 for a £1,499 fee.
Broker vs Direct Application
Should you use a mortgage broker or apply directly to a bank? Both approaches have pros and cons for new build buyers.
| Factor | Mortgage Broker | Direct to Lender |
|---|---|---|
| Product range | Whole-of-market broker searches 50–100+ lenders | Only that lender's products |
| New build expertise | Good brokers know which lenders accept your developer, property type, and lease terms | Branch staff may not understand new build specifics |
| Exclusive deals | Some brokers have exclusive rates not available directly | Some lenders have direct-only rates not available through brokers |
| Cost | Free (commission from lender) or fee-based (£300–£500) | Free to apply |
| Speed | Experienced broker submits clean application = faster processing | May face longer processing if application is incomplete |
| Support during process | Broker chases lender, handles queries, manages timelines | You deal with the lender's call centre directly |
| Offer expiry management | Broker monitors and arranges extensions or alternatives | You must track this yourself |
| If declined | Broker immediately tries alternative lender — knows who to approach | You start from scratch with a different lender |
Types of Brokers
| Broker Type | What They Search | How They're Paid | Best For |
|---|---|---|---|
| Whole-of-market (fee-free) | Full market of lenders | Commission from lender only | Most buyers — free access to full market |
| Whole-of-market (fee-charging) | Full market of lenders | Commission + broker fee (£300–£500) | Complex cases — fee incentivises broker to find best deal regardless of commission level |
| Multi-tied | Panel of selected lenders (not full market) | Commission from panel lenders | Be cautious — they can't search the whole market |
| Tied / restricted | Single lender only | Commission from that lender | Avoid for new builds — you need full market access |
| Online / digital broker | Usually whole-of-market via algorithm | Commission or fee | Straightforward applications. May lack new build expertise. |
Questions to Ask a Broker Before Instructing
| Question | Good Answer | Red Flag |
|---|---|---|
| Are you whole-of-market? | "Yes, I search the full market including specialist lenders" | "I work with a panel of lenders" — means limited choice |
| Do you charge a fee? | Clear answer: "No, I'm commission-only" or "Yes, £X — here's why" | Vague or evasive about fees |
| Have you handled new build mortgages before? | "Yes, I regularly work with [developers] in this area" | "It's the same as any mortgage" — it's not |
| How do you handle offer expiry on new builds? | "I choose lenders with extended validity and monitor the timeline" | Confusion about what offer expiry means for new builds |
| Which lenders work with my developer? | Names specific lenders and their criteria for your developer | Doesn't know or hasn't checked |
| What's your availability? | "I'm available evenings/weekends and respond within 24 hours" | Office hours only, slow responses |
Recommendation for new build buyers: Use a whole-of-market broker. The new build complications (developer panels, offer validity, incentive treatment, lease requirements) make a knowledgeable broker significantly more valuable than saving a few pounds going direct.
Which Lenders Are Best for New Builds?
Lender policies for new builds change frequently. Rather than naming specific lenders (which would quickly become outdated), here's how to identify the right lender for your situation.
Lender Categories for New Builds
| Category | Typical Characteristics | Best For |
|---|---|---|
| Major high street banks | Competitive rates, 85–90% LTV on new builds, 6-month offer with 3-month extension, approved developer lists | Buyers with standard income, developer on approved list, completion within 9 months |
| Large building societies | Often more flexible on income assessment, may offer 90%+ LTV, longer offer validity, manual underwriting | Self-employed buyers, unusual income, need for longer offer validity |
| Specialist new build lenders | Purpose-built for new build timing, 12+ month offers, understand developer processes | Off-plan purchases, extended build timelines, complex developments |
| Smaller building societies | Manual underwriting, flexible criteria, may lend on non-standard construction | Unusual property types, small developments, non-standard situations |
| Challenger banks / digital lenders | Competitive rates, fast processing, but may have stricter automated criteria | Straightforward applications where speed matters |
Key Criteria to Check with Any New Build Lender
| Criterion | What to Ask | Why It Matters |
|---|---|---|
| New build LTV limit | "What's the maximum LTV for a new build house? Flat?" | Many cap flats lower than houses (e.g., 85% flat vs 90% house) |
| Developer approved | "Is [developer name] on your approved list?" | Some lenders only lend on properties from approved/registered developers |
| Offer validity | "How long is the offer valid? Can it be extended for a new build?" | Must cover your expected completion date |
| Incentive policy | "How do you treat developer incentives for LTV calculation?" | Some deduct all incentives, others only above a threshold |
| Valuation approach | "Will you do a desktop, drive-by, or physical valuation?" | Physical inspection is slower but may produce a more favourable valuation |
| Lease requirements | "What are your minimum lease length and ground rent requirements?" | For leasehold properties — criteria vary significantly |
| Re-inspection | "Will you require a re-inspection when the property is complete?" | Adds cost and potential delay to completion |
| Warranty providers accepted | "Do you accept [warranty provider]?" | Not all lenders accept all warranty providers — check before applying |
How to Get Multiple Quotes Efficiently
| Step | Action | Detail |
|---|---|---|
| 1 | Use a whole-of-market broker | They search 50–100+ lenders for you. This is the most efficient route to multiple quotes. |
| 2 | Check 2–3 comparison websites | MoneySuperMarket, Compare the Market, and similar sites show headline rates but miss broker-exclusive deals and new build restrictions. |
| 3 | Check your own bank | Existing current account holders sometimes get loyalty rates or reduced fees. Worth checking even if using a broker. |
| 4 | Ask the developer | Developers often have relationships with specific lenders. Their recommended lender may offer incentives — but compare against the market. |
| 5 | Check for exclusive online rates | Some lenders offer lower rates for online-only applications that aren't available through brokers. |
A good broker effectively does steps 1–4 for you and knows about step 5. This is why most new build buyers benefit from starting with a broker.
Negotiating a Better Rate
Mortgage rates are more negotiable than most buyers realise, particularly through brokers.
| Tactic | How It Works | When It Works |
|---|---|---|
| Show competing quotes | Tell your broker (or the lender directly) that you have a better rate elsewhere | Lenders occasionally match or beat to win business, especially on larger loans |
| Ask for fee waiver | Request arrangement fee be reduced or waived | More likely on larger mortgages (£300k+) or when the lender is running promotions |
| Request free valuation | Ask for the valuation fee to be waived | Many lenders offer free valuations on new builds — always ask |
| Ask about rate lock | Request that today's rate is locked in from application, not from offer | Protects against rate rises during the processing period |
| Negotiate through broker | Brokers have existing relationships and volume agreements with lenders | Brokers often secure rates or terms not available to direct applicants |
| Time your application | Lenders often release better rates at month-end or quarter-end to hit targets | Your broker may advise waiting a few days if a better product launch is expected |
| Increase deposit if close to threshold | Going from 11% to 15% deposit crosses an LTV band (89% to 85%) and unlocks better rates | If you can stretch your deposit by 1–4%, check if it crosses an LTV threshold |
The Rate Lock: Protecting Against Rises
Between applying and receiving your offer, rates can change. Some lenders offer protection.
| Lock Type | How It Works | Availability |
|---|---|---|
| Rate locked at application | The rate you applied for is guaranteed regardless of what happens to rates before offer | Some lenders offer this — your broker should confirm |
| Rate locked at offer | Rate is only confirmed when formal offer is issued (usually 2–4 weeks after application) | Most common approach |
| Rate switch allowed before completion | If rates drop between offer and completion, lender lets you switch to the lower rate | Rare but available from some lenders — very valuable for long new build timelines |
| No lock | Rate can change between application and offer | Uncommon but check — some smaller lenders operate this way |
For new build buyers where completion may be months away, rate lock and rate switch policies are particularly important. A rate rise of 0.25% during your processing period costs roughly £30–£40/month on a £250,000 mortgage.
What the Developer's Recommended Lender Really Means
Most new build developers recommend specific mortgage lenders or brokers. Here's what's actually happening.
| What Developer Says | What It Actually Means | What You Should Do |
|---|---|---|
| "We recommend [Lender X]" | Developer has a commercial relationship with that lender. May receive referral fees. | Compare their rate against the market. It may or may not be competitive. |
| "Use our in-house broker" | Developer employs or has arrangement with a specific brokerage. Broker may be tied or multi-tied. | Ask if they're whole-of-market. If not, use them for information but get independent advice too. |
| "This lender offers the fastest turnaround" | May be true — developer wants quick exchange. But fastest isn't always cheapest. | Prioritise getting the right deal over speed. A few extra days to save thousands is worth it. |
| "Only [Lender X] can offer 95% on our properties" | May be true for high LTV — but check with a whole-of-market broker to verify. | Verify independently. If true, check whether saving a larger deposit and using a different lender saves more overall. |
There is nothing wrong with the developer's recommended lender — they may genuinely offer the best deal. But always compare independently. The developer's incentive is to get you to exchange quickly, not to find you the cheapest mortgage.
Hidden Costs to Compare Between Lenders
Beyond the headline rate and arrangement fee, these costs vary between lenders and affect your total outlay.
| Cost | Range | How to Compare |
|---|---|---|
| Arrangement / product fee | £0–£1,999 | Include in total cost calculation. Can usually be added to loan (but then you pay interest on the fee). |
| Valuation fee | £0–£500 | Many lenders offer free valuation — check before assuming you'll pay |
| Booking / application fee | £0–£250 | Charged upfront and usually non-refundable. Increasingly rare but check. |
| Higher lending charge | £0–£1,500 | Charged on high LTV (90%+) by some lenders. Added to loan or payable upfront. |
| Telegraphic transfer fee (CHAPS) | £25–£50 | Small but annoying. Some lenders waive it. |
| Exit / deeds release fee | £50–£300 | Charged when you remortgage away. Factor into total cost over deal period. |
| Re-inspection fee (new build specific) | £100–£250 | If lender requires post-completion re-inspection, you pay. Not all lenders require it. |
| Early repayment charge | 1–6% of loan | Check the full ERC schedule. Critical if you might sell, port, or overpay beyond allowance. |
Comparison Checklist: What to Record for Each Lender
Use this checklist when comparing multiple lender quotes. Record these details for each option to make an informed decision.
| # | Item | Lender 1 | Lender 2 | Lender 3 |
|---|---|---|---|---|
| 1 | Lender name | |||
| 2 | Product type (fixed/tracker/etc.) | |||
| 3 | Initial rate | |||
| 4 | APRC | |||
| 5 | Monthly payment (initial period) | |||
| 6 | Monthly payment (after reversion to SVR) | |||
| 7 | Arrangement fee | |||
| 8 | Valuation fee | |||
| 9 | Other fees (booking, CHAPS, etc.) | |||
| 10 | Total cost over deal period (payments + fees − cashback) | |||
| 11 | Cashback amount | |||
| 12 | ERC schedule | |||
| 13 | Overpayment allowance (% per year) | |||
| 14 | Portability | |||
| 15 | New build max LTV | |||
| 16 | Offer validity (including new build extension) | |||
| 17 | Developer approved? | |||
| 18 | Rate locked at application or offer? | |||
| 19 | Re-inspection required? | |||
| 20 | Payment holiday facility? |
When to Lock In vs When to Wait
| Scenario | Strategy | Reasoning |
|---|---|---|
| Rates are rising, completion within 6 months | Lock in now — apply immediately | Every week of delay means potentially higher rate. Rate is locked at application or offer. |
| Rates are falling, completion within 6 months | Apply now but ask about rate switch | Secure an offer but if rates drop further, switch to the lower product before completion. |
| Rates are stable, completion within 6 months | Apply now — no advantage to waiting | Get the process underway. Rates stable means no penalty for committing now. |
| Completion 6–12 months away | Get DIP now, apply formally 5–6 months before completion | Applying too early risks offer expiry. Too late risks delays. |
| Completion 12+ months away | Get DIP, monitor rates, apply 6–9 months before | Cannot lock in rates this far out. Budget conservatively for rate changes. |
Common Comparison Mistakes
| Mistake | Why Buyers Make It | The Correct Approach |
|---|---|---|
| Comparing rates without fees | Rate is the most visible number | Calculate total cost over deal period (rate + fees − cashback) |
| Using comparison sites as final answer | Convenient and easy | Comparison sites don't show broker-exclusive deals, new build restrictions, or true availability |
| Choosing biggest brand name | "Safe" feeling with a major bank | Smaller lenders and building societies often have better new build policies and rates |
| Not checking new build eligibility | Assuming all lenders treat new builds the same | Check LTV cap, developer approval, offer validity, and property type restrictions before applying |
| Applying to multiple lenders simultaneously | Trying to maximise chances | Multiple hard searches damage your credit score. Use a broker who does a single search across many lenders. |
| Ignoring the reversion rate | "I'll remortgage before then" | Life happens. Check the SVR in case you don't remortgage on time — a 2% SVR difference is £200+/month |
| Not considering the broker's value | "I can do this myself" | For new builds, a broker's knowledge of developer panels, offer extensions, and specialist lenders typically saves more than any fee charged |
Frequently Asked Questions
How many lenders should I compare?
A whole-of-market broker effectively compares the full market for you. If going direct, check at least 5 lenders including at least one building society and one challenger bank, plus your own bank. For new builds, the shortlist narrows quickly based on developer approval and property type acceptance.
Should I add the arrangement fee to the mortgage or pay upfront?
If you have the cash, pay upfront — adding a £1,499 fee to a 25-year mortgage at 4.5% means you pay £2,415 total for that fee (the fee plus interest on it). If you need the cash for your deposit, adding it to the loan is reasonable but understand the true cost.
Is the cheapest rate always the best deal?
No. The cheapest rate with a £1,999 fee can be more expensive than a slightly higher rate with no fee, especially on smaller mortgages. Always compare total cost over the deal period, not rate alone.
Can I switch lenders after my mortgage offer is issued?
Yes, but it means starting a new application, new valuation, and resetting the timeline. Only switch if the saving is significant enough to justify the delay and additional costs. Discuss with your broker before switching.
Do mortgage rates differ between new builds and resale?
The rates themselves are generally the same, but the available LTV bands may differ (lower maximum LTV = higher required deposit = different rate band). The practical effect is that new build buyers sometimes access a higher rate band than they would on a resale property at the same price.
What if no lender will accept my developer?
This is more common with small, local developers who aren't registered with NHBC or equivalent warranty providers. Solutions: ask the developer to register with a warranty provider, use a specialist lender with manual underwriting, or consider a self-build mortgage if the development is very small scale.
Related Guides
- Mortgage affordability — what lenders check and how to maximise borrowing
- How to choose the right mortgage product
- The complete new build mortgage process
- Common mortgage problems and how to fix them
- Mortgage types explained
- How much deposit do you need?
- Stamp duty on new builds
- Complete new build budget planner
- First-time buyer's complete guide