Buying a new build property is one of the best ways to get on the property ladder. It’s also one of the most popular ways to get a mortgage, especially if you want to avoid the lengthy process of applying for a mortgage with a second-hand property. Here are 9 reasons why you should consider getting a new build mortgages
- Save You Money
A new construction mortgage can help you save money on your home purchase. The interest rate is typically lower than the rate for a conventional loan because there is no risk of default. The terms of the loan are also typically shorter, which means you’ll pay less money in interest over time. In addition, the lender may offer points or discounts to make the loan more affordable for your budget.
- Save You Time
There’s no waiting around for a home to be built before you can buy it with a conventional loan. With a new construction mortgage, you can be in your dream home before it’s even built! This allows you to move into your home as soon as possible, rather than having to wait until after it’s constructed.
- Save Your Frustration
You can save yourself a lot of time and frustration by considering a new construction mortgage. If you’re on the verge of buying your first home, or if you’ve been looking for a new place but haven’t been quite able to find the right one, then this may be the right solution for you.
- Offer More Convenience
New build mortgages are often more convenient than traditional mortgages because they can be approved faster. A traditional mortgage requires several weeks of paperwork, including proper documentation of income and creditworthiness. New construction loans, on the other hand, can be approved in as little as two days since there is no need to verify income or creditworthiness.
- Be More Flexible
When buying a new construction home, there are many more opportunities to negotiate with the builder and get exactly what you want in your new home. You can design your own floor plan or even select custom features that may not be available in other homes being built by the same builder. The flexibility of building a home from scratch allows buyers to customize their dream home exactly as they want it — and at a lower cost than buying an existing home!
- Be Easier on Your Budget
Construction loans can be easier on your budget than other types of financing because they don’t require an appraisal or inspection since the property hasn’t been built yet. This means that there are fewer expenses to pay when buying a home under construction. It also means that you may have more flexibility in choosing how much equity to put into your new home. And, if you already have some equity in another property, you can use it as collateral for your new construction mortgage. This is especially helpful if you want to stay in the same neighborhood but need more room or want something newer than what’s currently available in the market.
- Be Less Risky to Your Credit Score
One benefit that many people don’t realize is that they can get better terms on their mortgages when they buy new construction homes. This is because lenders are less worried about defaulting on these types of loans — or even foreclosure — than they are with traditional mortgages.
- Eliminate the Need for Private Mortgage Insurance (PMI)
Many buyers prefer new construction mortgages because they eliminate the need for private mortgage insurance (PMI). PMI is required when a buyer makes a down payment of less than 20 percent of the purchase price. When you purchase a home with a conventional loan, you must pay this fee until your equity reaches 20 percent. However, new construction loans require no down payment, so PMI is not necessary.
- Generate Tax Breaks for Homeownership
Another reason why a new construction mortgage may be right for you is that it can generate tax breaks when buying a new home. For example, if your income level qualifies and you buy a newly built home within two years after it was completed, then you may be eligible for the Mortgage Interest Deduction (MID). This deduction allows homeowners to deduct all of their mortgage interest from their taxes each year. However, this deduction does not apply to homes purchased through refinancing or through an FHA loan — only those bought as newly constructed properties will qualify for this deduction.
As you can see, new build mortgages are a viable alternative to traditional remortgages or routine purchases. As with any decision, there are pros and cons to each, and it will be up to you to determine which option works best for your needs, comfort level, and lender. But by keeping in mind the ten reasons listed above, you may find yourself on the path to enjoying the benefits of a brand-new home from day one.