Self build mortgages

Trying to work out the best way to finance your project? Scarlett Deamer speaks to experts about the funding options available and common mistakes to avoid

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Building your own home is an exciting way to create a truly unique space, but it’s not a route that’s well understood but high street banks. Instead, you’ll want to partner with specialists to get the right finance in place for your project. Unlike a standard mortgage, where the full loan is released at once, self build mortgages release funds in stages as the build progresses. In this guide, we’ll explain how these mortgages work, how to apply, the essential insurance and warranties you’ll need, and what to watch out for.

What is a self build mortgage?

Dedicated self build mortgages were created to overcome a key risk for lenders providing finance for a home that’s yet to be constructed - namely that there’s no asset for them to secure the loan against (in a standard home purchase, this would be the house itself). The solution is the stage payment mortgage, which reduces the lender’s risk while also giving self builders a defined payment schedule for each phase of the work. There are three main types of self build mortgage: