We’ve seen at least one new prime minister, five royal births and a global pandemic since the idea of a Help to Build scheme was first mooted, but the self and custom build version of Help to Buy is finally here!
The aim of the scheme is to make building your own home a more accessible option by reducing the amount of your own cash you need to put in. Under Help to Build, you only need to find 5% of your land and build costs from your own pocket, compared to perhaps 20% or more with many current mortgage products. The rest of the funding comes from a self or custom build mortgage of up to 95% of the total – released in stages as the build progresses.
When your project is finished, a government-funded equity loan is paid directly to your mortgage lender to reduce the mortgage balance. The equity loan is up to 40% of your project costs in London – or 20% outside the city – and is interest-free for the first five years.
There are two distinct routes for building your own home: buying a ready-made plot on a custom build site; or sourcing your own plot and organising the design, planning and construction yourself. Via the latter, there are many other costs involved – particularly architect, planning and legal fees. This means that, in reality, you would need to put in far more than 5% of the actual land and build costs. Bearing this in mind, it seems the type of person the scheme is designed to help – younger and less wealthy than the current typical self builder – is potentially more likely to purchase a plot on a custom build site, where they can still have input into the design of their home, but much of the pre-build legwork is already done for them and a developer will manage delivery.