Self-build mortgages are relatively risky for lenders and most will request to view detailed plans, projected costs and relevant planning permissions in order to weigh up your eligibility and potential risks. Without the right help and advice, this can potentially mean a lengthy process which may delay your project build.
Self-build financing differs from ‘regular’ mortgages as funds are released in stages as the build progresses. Choosing the right product for your circumstances in crucial; by speaking to our self-build finance experts at the early stages of your project planning, we will be able to identify the very best terms and rates on offer through our network of private and high street lenders. Having peace of mind that your financing is in place will allow you to focus on your end goal - building your dream home.
Some points to consider when applying for a self-build mortgage:
- Self-build mortgages can be high risk for most lenders. You will need a deposit of at least 30% or more.
- Lenders will expect you to employ professional, regulated builders, architects and contractors rather than carrying out the work yourself. You will have to submit plans along with building materials used.
- Factors such as building type, materials, location, and projected costs will all impact which lenders will lend and how much.
- You must be able to afford somewhere to live while the building work is being carried out.
- Lenders will also expect you to have all the relevant planning permission in place before you approach them
- If you want to buy a plot of land for £100,000 and spend another £500,000 building properties on it, a lender might finance 50% of the plot purchase and 70% of the build.
- Lenders will need to carry out regular inspections to make sure everything’s going according to plan before they sign off each instalment of the funds.
- This extra involvement and administration cost for the lender means that a self-build mortgage is likely to be more expensive than a standard mortgage.
- How much can you borrow? This depends entirely on your circumstances and the property being built.
- Please contact us to discuss your financial needs.