Self-build Mortgages

 

 

Self-build mortgages

More risks are involved in building your own home but self-build mortgages can help with the financial complications of managing such a project. The main difference between a self-build mortgage and a house purchase mortgage is that with a self-build mortgage, money is released in stages as the build progresses rather than as a single amount.
There are two types of mortgage which could be used. The first option is a traditional arrears-based mortgage released in staged payments on completion of each stage. The second option is an advance payment scheme which releases funds in advance of each stage of construction and removes the need for bridging loans. The stages can be fixed or flexible but there are usually five and these depend on the type of building work. Not many mortgage companies will offer an advanced payment, this is due to the risk involved.
If you want to stay in your current home while the new one is built, you will need to find out what the lender's attitude will be to any outstanding mortgage on your existing property. You also, need to ensure that you have enough income to cover both mortgages.
About 20,000 people build their own homes in the UK each year and this number is rising. Over 30 banks and building societies offer mortgages to self-builders. You may be able to get between 25% and 80% of the value of the building plot and between 65% and 95% of the costs of the building.


Digger ends up in own excavation, Photo taken 2010 during construction of extension to dwelling