self build mortgages

Building your own home can be a rewarding experience. If you’re planning to build your own home or want to carry out a conversion or renovation, we can help you find the right way to finance the project.  We work with lenders across the UK to find the best self build mortgages for our clients.

A self-build mortgage is a loan that you take out to fund a property that you are building. The main difference to a standard residential mortgage is that you receive the funds in stages, as you complete stages of the build, rather than one lump sum. This reduces the lender’s risk and ensures that the funds are spent correctly. It also helps to prevent you running out of funds halfway through the project. 

Typically, you receive an initial payment when you purchase the land. You’ll then receive further payments at particular stages i.e. foundations are laid, when the property is up to eaves level and the roof is watertight and interior walls plastered. The last payment is made on completion.

If you are a first time buyer and looking for a way to get on the property ladder, a self build mortgage can be a good option.

Types of self-build mortgages

There are two types of self-build mortgages:

• Arrears: This is the most common type of self-build mortgage. Payments are released after each stage of the build is completed. This mortgage type works better for people who have cash on hand to help pay for the project
• Advance: Funds are released at the beginning of each stage, meaning that money is available when bills for labour and materials are due, removing the need for bridging loans or other short-term borrowing. This mortgage type helps with cashflow and works better for people who have less money available to fund their project. Be aware that fewer self build mortgage providers are prepared to offer this kind of mortgage.

If you’re considering building your own property and would like to discuss funding options, get in touch with us today. 

Your property may be repossessed if you do not keep up repayments in line with the lenders schedule. Think carefully before securing debt against any property.