New Build Mortgages Explained: Fixed, Tracker, Variable, and Every Mortgage Type Available in 2026

How New Build Mortgages Differ from Standard Mortgages

Before diving into mortgage types, it's important to understand that new build mortgages have specific characteristics that don't apply to standard property purchases:

• Fewer lenders — not all mortgage lenders offer products for new builds. Some restrict lending on new builds entirely; others impose lower maximum loan-to-value (LTV) ratios. Where you might get a 95% LTV mortgage on a Victorian terrace, the same lender might cap new builds at 85% LTV.
• Longer offer periods needed — if you're buying off-plan, there can be months between your mortgage application and completion. Standard mortgage offers last 6 months; some new build products offer 9 or 12-month validity.
• Valuation risk — new builds are valued by surveyors who may value the property below the purchase price (a "down-valuation"). This is more common on new builds because the surveyor has to assess market value without identical recent comparable sales.
• Developer incentives — kitchen upgrades, flooring packages, stamp duty contributions, and cash-back deals all need to be declared to the lender. Some incentives above certain thresholds reduce the amount you can borrow.
• Construction type matters — timber frame, steel frame, and non-traditional construction methods can limit which lenders will approve the mortgage. Most large developers use accepted construction methods, but always check.

Fixed-Rate Mortgages

The most popular mortgage type in the UK. Your interest rate is locked for a set period — typically 2, 3, 5, or 10 years — regardless of what happens to the Bank of England base rate or wider market rates.

How It Works

You agree a fixed interest rate at the outset. Your monthly payments stay exactly the same for the duration of the fixed period. When the fixed period ends, you're moved to the lender's Standard Variable Rate (SVR), which is almost always higher. At that point, you remortgage to a new deal.

Typical Terms

Rates are indicative and vary by LTV, lender, and individual circumstances.

Pros for New Build Buyers

• Budget certainty — you know exactly what your payments will be during the fixed period
• Protection against rate rises — if the Bank of England raises the base rate, your payments don't change
• Easier to budget for the additional costs of a new home (furnishing, garden, etc.)
• Most widely available mortgage type, with the most competitive rates

Cons for New Build Buyers

• Early repayment charges (ERCs) if you need to exit the deal early — typically 1-5% of the outstanding balance. This matters if you need to sell within the fixed period.
• If rates fall significantly during your fixed period, you're locked into the higher rate
• Longer fixes (5-10 years) may have higher ERCs that make selling or remortgaging expensive

New Build-Specific Considerations

For off-plan purchases, you need the mortgage offer to remain valid until your completion date. A 2-year fix starts when the mortgage completes, not when you apply — but the offer itself typically expires after 6 months. If your build is delayed, the offer may expire and you'll need to reapply (potentially at a different rate). Some lenders offer extended offer validity of 9-12 months specifically for new builds — worth asking about.

The 5-year fix is the most popular choice for new build buyers because it provides stability through the first years of homeownership (when expenses are highest) and avoids the need to remortgage during the new build premium depreciation period.

Tracker Mortgages

A tracker mortgage charges an interest rate that moves directly in line with the Bank of England base rate, plus a set margin. If the base rate goes up, your payments go up. If it comes down, your payments fall.

How It Works

The rate is expressed as "base rate + X%". For example, "base rate + 0.75%" means if the base rate is 4.5%, you pay 5.25%. If the base rate drops to 4%, you pay 4.75%. The margin stays constant; only the base rate changes.

Tracker deals typically last for 2, 3, or 5 years, after which you revert to the lender's SVR. Some "lifetime tracker" mortgages track the base rate for the entire mortgage term.

Pros for New Build Buyers

• If base rates fall, your payments fall automatically — no need to remortgage to benefit
• Transparent pricing — you always know exactly how your rate is calculated
• Some tracker deals have no early repayment charges, giving you flexibility to switch
• If you believe rates are heading down, a tracker lets you benefit immediately

Cons for New Build Buyers

• If base rates rise, your payments rise immediately — no protection
• Harder to budget when payments can change every month
• For new build buyers already stretching their budget, payment uncertainty adds risk
• Fewer tracker products available for new builds compared to fixed rates

When a Tracker Makes Sense for New Builds

Trackers work best when: the Bank of England base rate is widely expected to fall, you have a comfortable financial buffer to absorb potential payment increases, and you want flexibility to remortgage without ERCs. In 2026, with the base rate environment in flux, trackers appeal to buyers who believe rates have peaked and want to benefit from any cuts without waiting for their fixed deal to end.

Discounted Variable Rate Mortgages

A discount mortgage charges the lender's Standard Variable Rate (SVR) minus a set discount. Unlike a tracker (which follows the base rate), a discounted variable follows the lender's own SVR — which the lender can change independently of the base rate.

How It Works

The rate is expressed as "SVR minus X%". If the lender's SVR is 7.5% and your discount is 2%, you pay 5.5%. But if the lender raises their SVR to 8%, you pay 6% — even if the Bank of England base rate hasn't changed.

Pros

• Initial rates can be competitive
• Payments fall if the lender reduces their SVR
• Some offer no ERCs, providing flexibility

Cons

• Less transparent than trackers — the lender controls the SVR and can raise it at any time, for any reason
• You're dependent on the lender's commercial decisions, not just the base rate
• Payment uncertainty — harder to budget than a fixed rate
• Relatively uncommon for new build products

Verdict for New Build Buyers

Discounted variable mortgages are less popular than fixed rates or trackers for good reason — the lack of transparency about SVR changes makes them harder to predict. Most new build buyers are better served by a fixed rate (for certainty) or a tracker (for transparent variable pricing).

Offset Mortgages

An offset mortgage links your savings account to your mortgage. Instead of earning interest on your savings, your savings balance is "offset" against your mortgage balance, reducing the amount you pay interest on.

How It Works

If you have a £300,000 mortgage and £30,000 in a linked savings account, you only pay interest on £270,000. Your savings don't earn interest, but the interest you save on a mortgage (typically 4-5%) is far more than you'd earn in a savings account (typically 3-4%) — and the mortgage interest saving is tax-free.

Pros for New Build Buyers

• Tax-efficient — the interest saving is equivalent to earning tax-free interest on your savings at the mortgage rate
• Particularly valuable for higher-rate taxpayers who would pay 40% tax on savings interest
• Your savings remain accessible — you can withdraw them at any time (though your mortgage payments would then increase)
• Useful if you're self-employed or have irregular income and keep large cash reserves

Cons for New Build Buyers

• Offset mortgage rates are typically 0.2%-0.5% higher than equivalent standard fixed or tracker rates
• You need substantial savings to make the offset worthwhile — below £10,000-£15,000, the higher rate outweighs the benefit
• Fewer offset products available for new builds
• More complex to understand and manage

When It Makes Sense

Offset mortgages suit new build buyers who have significant savings (£20,000+) that they want to keep accessible rather than using as a larger deposit, are higher or additional-rate taxpayers, or are self-employed with fluctuating cash balances. For most first-time buyers with minimal savings after the deposit, a standard fixed rate is simpler and cheaper.

Interest-Only Mortgages

With an interest-only mortgage, your monthly payments cover only the interest charged — you don't repay any of the capital. At the end of the mortgage term, you still owe the full amount borrowed and must repay it in one lump sum.

How It Works

On a £300,000 mortgage at 4.5%, your monthly payments would be approximately £1,125 (interest only). On a repayment mortgage, the same loan would cost approximately £1,670 per month. The difference is significant — but you haven't reduced the debt at all.

Availability for New Builds

Interest-only mortgages are very difficult to obtain for residential purchases in 2026. Since the 2008 financial crisis, lenders have dramatically tightened criteria. Most require:

• A maximum LTV of 50-75% (meaning a deposit of 25-50%)
• A credible repayment strategy (investments, pension, sale of another property)
• Minimum income thresholds (often £75,000+)
• Substantial existing assets

For most new build buyers, particularly first-time buyers, interest-only is not available and not appropriate. It's primarily used by buy-to-let investors and high-net-worth borrowers.

Part-and-Part Mortgages

A compromise: part of the mortgage is on a repayment basis, and part is interest-only. This reduces monthly payments compared to full repayment while still paying off some of the capital. Availability is limited but growing.

Guarantor Mortgages

A guarantor mortgage involves a family member (usually a parent) agreeing to cover your mortgage payments if you can't. This allows the lender to offer you a mortgage you might not qualify for on your own — either because of income, deposit size, or credit history.

Types of Guarantor Mortgage

• Income guarantor — the guarantor's income is considered alongside yours for the affordability assessment. This allows you to borrow more.
• Savings-linked guarantor — the guarantor places a sum of money (typically 10-20% of the property value) in a savings account linked to your mortgage. The savings are held as security and released after a set period (usually 3-5 years) if you maintain payments.
• Property-linked guarantor — the guarantor uses equity in their own property as additional security for your mortgage. This is higher risk for the guarantor as their home is at stake.

Pros for New Build Buyers

• Enables purchases that wouldn't be possible on your income alone
• Can help with 95% or even 100% LTV lending (some products allow no deposit if the guarantor provides sufficient security)
• Useful for first-time buyers whose income is growing but hasn't yet reached the level needed for the mortgage they want

Cons and Risks

• The guarantor is legally liable for the mortgage payments — this is a serious financial commitment
• The guarantor's own borrowing capacity is reduced while the guarantee is active
• Relationship strain if payments are missed
• For property-linked guarantees, the guarantor's home is genuinely at risk
• Limited product range compared to standard mortgages

New Build Considerations

Guarantor mortgages can be particularly useful for new build purchases where the deposit requirement is higher (some lenders require 15-20% for new builds). A savings-linked guarantor arrangement can effectively bridge the gap between a 5-10% deposit and the lender's minimum requirement.

Green Mortgages

Green mortgages (also called energy-efficient mortgages) offer preferential rates or cashback for properties with high energy efficiency ratings. New builds are ideally positioned for these products because they're built to current energy standards and typically have EPC ratings of A or B.

How They Work

Lenders offer a lower interest rate (typically 0.1%-0.3% below their standard equivalent) or a cashback payment (£500-£2,000) for properties with an EPC rating of A or B, or sometimes C. Since most new builds achieve at least a B rating, most new build buyers automatically qualify.

Available Products in 2026

• Barclays Green Home Mortgage — rate discount for properties with EPC A or B
• NatWest Green Mortgage — preferential rates for energy-efficient homes
• Nationwide Green Further Advance — for energy efficiency improvements
• Halifax / Lloyds — green mortgage rates for A/B rated properties
• Several building societies also offer green mortgage products

Product availability changes frequently — check current offerings with a broker or direct with lenders.

Why New Build Buyers Should Always Check

If your new build has an EPC rating of A or B (and it almost certainly does), you should always check whether a green mortgage product beats the standard equivalent. The rate discount may be small, but over 25-30 years, even 0.1% saves thousands. There's no downside — the mortgage works identically to a standard product, just at a lower rate.

Shared Ownership Mortgages

If you're buying a new build through shared ownership, you need a specific type of mortgage. You're buying a share of the property (typically 25-75%) and paying rent on the remainder to the housing association.

How They Work

The mortgage covers only your purchased share. So if the property costs £300,000 and you're buying a 40% share (£120,000), your mortgage is for up to £120,000. You pay rent on the remaining 60% to the housing association.

Key Differences

• Not all lenders offer shared ownership mortgages — the market is more limited
• Affordability assessments include the rent payments as well as the mortgage
• Deposit is calculated on your share, not the full property value (5-10% of your share)
• Some lenders have minimum share requirements (e.g., won't lend on shares below 25%)
• Staircasing (buying additional shares later) may require a new mortgage application and valuation

New Build Shared Ownership

Most new build shared ownership properties are managed by housing associations and come with specific nomination rights and eligibility criteria. Check whether the development offers shared ownership as an option — many new build sites include a proportion of affordable housing, of which shared ownership is a key part.

For more on shared ownership, see our guides on shared ownership explained and deposit requirements.

Joint Borrower Sole Proprietor (JBSP) Mortgages

A relatively new product where up to 4 people can be on the mortgage (contributing their income for affordability) but only 1 or 2 are on the property title. This allows parents to help children buy without being named as property owners — avoiding the additional property stamp duty surcharge.

How It Works

Mum and Dad join the mortgage application, boosting the combined income for affordability. But only you (the buyer) go on the property title. Your parents don't own the property, so if they already own a home, they don't trigger the additional property SDLT surcharge (currently 5%).

Availability

Offered by several lenders including Barclays, Halifax, and some building societies. Criteria vary — most require all parties to have good credit, and some limit the ages of the additional borrowers.

New Build Advantage

JBSP mortgages are particularly useful for new builds where the purchase price (and therefore the required income multiple) tends to be higher than resale properties. Having parents' income on the application can bridge the gap between what you can borrow alone and the cost of the new build.

95% LTV Mortgages for New Builds

Getting a mortgage with just a 5% deposit is more difficult on a new build than on a resale property. Many lenders that offer 95% LTV mortgages on existing homes restrict new builds to 85% or 90% LTV.

Why Lenders Are More Cautious

• The new build premium — new builds typically sell at a premium to equivalent resale properties. If you need to sell quickly, the property may not achieve what you paid.
• Valuation risk — down-valuations are more common on new builds, which could leave the lender exposed if they've lent at 95% of an inflated price.
• Market correction risk — new build prices tend to fall faster than resale prices in a downturn.

Which Lenders Offer 95% LTV on New Builds?

The list changes frequently, but as of 2026, lenders willing to consider 95% LTV on new builds include some mainstream banks and building societies — though often with restrictions on property type, developer, or geographic area. A mortgage broker is invaluable here because they know which lenders are currently lending at 95% LTV on new builds and what criteria they apply.

For a detailed comparison of lender criteria, see our new build mortgage lenders guide.

Developer Deposit Schemes

Some developers offer schemes that bridge the deposit gap — such as a 5% deposit from you plus a 5% contribution from the developer (held as a second charge), enabling you to access a 90% LTV mortgage. These schemes have specific lender requirements and should be discussed with both the developer and your mortgage broker.

Which Mortgage Type Should You Choose?

There's no universally "best" mortgage type — it depends on your situation. Here's a decision framework:

Choose a Fixed Rate If:

• You want predictable monthly payments (the most common priority)
• You're stretching your budget and can't absorb payment increases
• You want to lock in current rates for security
• You're a first-time buyer and want simplicity

Choose a Tracker If:

• You believe the Bank of England base rate will fall
• You can comfortably absorb payment increases if rates rise
• You want flexibility to remortgage without ERCs
• You have a financial buffer of several months' payments

Choose an Offset If:

• You have £20,000+ in savings you want to keep accessible
• You're a higher-rate taxpayer
• You're self-employed with variable cash balances

Choose a Green Mortgage If:

• Your new build has an EPC of A or B (most do) — always check whether the green rate beats the standard rate

Consider a Guarantor / JBSP If:

• Your income alone doesn't support the mortgage you need
• Family members are willing and able to support your application
• You want to avoid the additional property stamp duty surcharge for helping parents

The Most Common Choice for New Build Buyers

In practice, the vast majority of new build buyers choose a 5-year fixed rate. It provides payment certainty during the most expensive years of homeownership (furnishing, settling in, potentially starting a family), avoids the need to remortgage during the new build premium depreciation window, and is available from the widest range of lenders with the most competitive rates.

Key Takeaways

• New build mortgages have specific restrictions — fewer lenders, potential LTV limits, and longer offer periods needed for off-plan purchases
• Fixed-rate mortgages are the most popular choice and provide payment certainty during the expensive early years of homeownership
• Always check green mortgage rates if your new build has an EPC of A or B — free savings with no downside
• 95% LTV is harder to get on new builds — expect to need at least 10% deposit with most lenders
• Guarantor and JBSP mortgages can help if your income alone isn't sufficient
• Use a mortgage broker with new build experience to navigate the limited product range — see our guide to getting the best deal
• For the full application process from DIP to completion, see our step-by-step mortgage guide