Over recent times self- builds have become very popular, primarily because it can be a more cost-effective way to build your own home ground up. This is done by purchasing your own piece of land, designing and building to your own specifications.
Mortgage finance for this type of project is very different from a conventional mortgage. The funds provided by the mortgage lender will allow you to:
- Purchase the piece of land.
- Fund building materials and labour costs.
- Pay professional fees and contractors. Eg. Architects/Structural Surveyors
- Fund any Guarantees/insurances required. For example: NHBC warranty 15- 20% buffer to ensure there are sufficient funds available for unexpected costs.
Funds are released at key stages over the build period and once construction is complete you can either re-mortgage to another lender or switch to a lower rate with the same lender.
Basic of a Self-Build Mortgage
Like traditional mortgages the full mortgage amount is not released upfront. The mortgage lender may provide the initial portion for the land purchase, if requested, at application stage for this purpose.
Further payments will be released after you have submitted the schedule of work that has just been carried out. The lender will than verify work completed and ensure all the requisite building standards have been met. The mortgage lender will usually appoint a surveyor to make visits, each time a stage payment is requested.
Self Build mortgages are a niche area and it's unlikely a mainstream mortgage lender would offer such a facility. However, there are specialist lenders within the market, who will consider these and are industry experts.
We have access to a wide selection of lenders who we can recommend for your needs. We therefore pride ourselves on searching for the most suitable mortgage for your needs whilst keeping the experience as smooth as possible.