GUIDE TO FINANCING YOUR PROJECT
Find the best mortgage for your self build with our in-depth guide – and learn how the government’s new Help to Build scheme is set to make it easier than ever to commission a bespoke home
Self builders need a very specific type of mortgage, designed to support their cashflow requirements during the journey to their dream home. This isn’t the kind of product you can pick up through the high street banks – instead, you’ll want to work with a specialist lender that can respond to your particular circumstances. So, what’s involved in securing appropriate finance?
What is a self build mortgage?
Fundamentally, there are three types of self build mortgage: advance stage payment; arrears stage payment (value -based); and arrears stage payment (cost-based). With all of these, money is released in phases to allow you to pay your bills at key milestones. These are typically: buying the plot; foundations done; wall plate/frame erection; wind and watertight; first fix; second fix/ completion. The amount paid out per stage is a percentage of either your actual costs or the value of the works, and is calculated based on your project’s individual requirements.
How much can I borrow?
Self build mortgage providers are regulated, and must meet affordability criteria. So, they will look not only at your savings, equity and income, but also your regularoutgoings and any outstanding debts. They’ll also check your planned project costs to ensure that you are embarking from a realistic starting point with your budget.