NatWest Set To Reduce New Build Deposit Contribution

by | Friday 28th Jun 2024 | Mortgage News

New Build Home Deposit Criteria Changes

NatWest has announced a significant change to its mortgage lending criteria, which is poised to make a substantial impact on the new build property market. The high street bank has increased its loan-to-value (LTV) ratios for new build homes, a move that will enable residential borrowers to reduce their upfront deposit requirements by an average of £20,000. In this article we will discuss new build deposit contribution criteria, and what these changes from NatWest mean for new build property buyers.

New LTV Ratios And New Build Deposit Contribution Criteria

Under the new criteria announced today, NatWest has raised the maximum LTV (loan-to-value) for new build properties. The loan-to-value means the amount of loan compared to the value of the property. For example, if you put down 10% of the value of the property as a deposit, you will need a mortgage of 90% for the rest of the value. Therefore, your LTV would be 90%. Here is the new ‘New Build Home Deposit’ criteria from NatWest:

  • For new build residential houses: 90% LTV, up from 85%
  • For new build residential flats: 85% LTV, up from 75%

This change means that buyers can now borrow a larger percentage of the property’s value, significantly reducing the amount they need to save for a deposit. Given that the average price of a new build home in the UK is currently around £394,000, according to Land Registry data, this adjustment could shave approximately £20,000 off the deposit requirement for many buyers.

New Build Home Deposit: Benefits For Homebuyers

By increasing the LTV ratios, NatWest is making it easier for prospective homeowners to enter the market, particularly in the face of rising property prices and living costs. This move is expected to provide a welcome relief for first-time buyers and others looking to purchase a new build home.

Understanding Mortgage Deposits

When purchasing a property with a mortgage, the deposit is a crucial component. Lenders require a deposit as a form of security, ensuring that the borrower has a financial stake in the property. This reduces the risk for the lender, as the deposit helps to cover potential losses if the borrower defaults on the loan.

Typically, a higher deposit can also result in better mortgage terms, including lower interest rates. However, saving for a deposit can be a significant barrier for many potential homeowners, especially in high-demand areas where property prices are steep. NatWest’s new criteria aim to alleviate some of this pressure by lowering the upfront financial burden on buyers.

Speak To A New Build Mortgage Broker Today

At Oportfolio Mortgages, we specialise in helping clients in need of new build mortgages. Our team of experts is well-versed in the latest market trends and lender criteria, ensuring that you receive the best advice and support throughout your homebuying journey. Whether you’re a first-time buyer or looking to upgrade to a new build property, we can assist you in finding the most suitable mortgage options. With NatWest’s recent changes, there’s never been a better time to explore the possibilities of owning a new build home. Contact us today to learn more about how we can help you make your dream home a reality.

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