Self-build Mortgages

Are you thinking of designing and building your own home?

Building your own home offers a wealth of benefits.

First and foremost, you get to choose what home to build. You don’t have to fit your life into a template designed by someone else. You can decide exactly what you want in terms of rooms, layout and architectural style. And whatever you choose, you know it will be completely unique.

Financially, it’s usually cheaper overall to build a property than buy one that’s been developed by someone else. So, all else being equal, you can pay off your mortgage sooner than you otherwise would, and get yourself mortgage-free earlier in life.

On top of that, self-build properties attract little or no stamp duty, making it even cheaper to build your own home for far less than it costs to buy one.

Why get a self-build mortgage?

A self-build mortgage brings your vision of building your own home within financial reach. It unlocks the funds you need to purchase land and commission architects and builders to start working on the property.

With the right self-build mortgage in place, you can focus on managing your building project, secure in the knowledge that the funds will be there when you need them.

Self-build mortgages are also used for major refurbishment projects, like barn conversions.

How do self-build mortgages work?

A self-build mortgage is different from a traditional one because the money is released in stages as the build progresses – either after each stage is reached, or before it begins. You only pay interest on the amount you’ve borrowed so far.

If funds are released in advance, you can potentially stay cash-positive throughout the project, which means you don’t have to sink so much of your own money into the build. That could allow you to stay living in your current property, without having to sell it.

The amounts involved can be based on the cost of the project, or on the value of the property at each stage. Using costs is simpler, because there is less risk of disagreement over what the unfinished property is currently worth.

How much can I borrow on a self-build mortgage?

You’ll probably want to get a mortgage to cover the cost of both the land and the actual construction.

If you choose advance stage payments, lenders will usually consider a mortgage for up to 95% of this value, which means you can get your self-build project started for just 5% of its final cost. With payment in arrears, you’ll probably be able to borrow up to 85%.

Self-build mortgages: questions to consider

• Do you need finance for the land purchase, the construction or both?
• What will it cost to build your property? How accurate are your estimates, and do you need to allow some margin for error?
• Do you need funds in advance of each stage, or could you receive them as each stage is done?
• How much do you need to borrow, and how much can you finance with your own savings?
• Are you going to stay in your current property while the build takes place, or do you need to remortgage it or get a bridging loan to raise funds?

How we can help with your self-build mortgage

When it comes to self-build, getting the right mortgage can make the difference between an enjoyable, hassle-free project and an expensive nightmare.

Every self-build project is different, which is why it’s vital to get the finance right. We can help you choose the right self-mortgage for the home you want, and the way you want to build it.

Talk to us and we’ll explain your options in detail, so you can make the best choice right from the start.

Get in touch

To chat about your self-build mortgage with no obligation, please contact us.