Self build mortgages

October 7, 2021

How do self build mortgages work?

The main difference between a self build mortgage over a traditional mortgage is that the money is released in stages as the build moves forward, rather than as a single lump sum amount.

Self build mortgage lenders will release funds for you to buy land; this will normally be subject to the plot having a minimum of outline planning or permitted development rights. Full planning will need to be obtained before any work starts and the funding from the self build mortgage lender can start to be drawn down.

Typically, a 20% – 25% deposit is needed against the cost of the whole project (purchase of land & build costs). However, there are some self build lenders that will allow a lower deposit. If you already own the land you are looking to build on and you already have planning permission in place then a self build mortgage lender will allow you use the plot value to draw funds on day one of the build.

Depending on the self build mortgage lender, funds can be released in advance or in arrears of each build stage. Your cash flow for the project itself will often determine which self build lender is most appropriate.

A self build mortgage lender will release the funds for your self build in stages and below is a typical example for a standard self build:

  • Stage 1
    Purchase of land (remortgage if owned)
  • Stage 2
    Preliminary costs & foundations
  • Stage 3
    Wall plate level
  • Stage 4
    Wind & Watertight
  • Stage 5
    First fix & plastering
  • Stage 6
    Second fix to completion

Need help with a self build mortgage?

Speak to one of our self build mortgage advice specialists, who will be happy to help.

01777 809700

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