Self Build Mortgages

A lot of people build their own homes because they cannot find the property they are looking for on the open market. However in order to build their dream home many require a mortgage. Often the fact that you are building your own home on a plot that you buy means that you are obtaining a home, hopefully in the area where you wish to be and at a cost that you can afford.

We all have a dream location in mind when it comes to property, well a self build mortgage could make it happen.

If you are not building your own property then perhaps you have found a property that needs renovating and a mortgage is needed to help you develop the property into a dream home.

To build your home you need to find a plot of land that preferably already has planning permission. Most plots come with a design of the build in place while others only have an outline which gives permission for the plot to be built on but there's no plans presently drawn up.

If you are not going to be around to supervise the building work then you might wish to employ a project manager to make sure that things get done in the right order and on time. As you have to finance the build yourself you will find there are a lot of lenders out there who are willing to help. Money will be released to you by the lender at key stages of the building progress. The lender releases the money this way so as to ensure that a cash flow doesn’t cause a problem during the build, so this is one reason why you should make sure that everything has been planned properly and is running to schedule. Check the cost of materials and as each stage progresses ensure you know what the next stage entails as there may not be any extra money available. Building installments normally are paid in arrears. It is not always wise to pay a builder for something that has not been completed.
An architect and surveyor will be needed to run a self build successfully. A percentage of both the lands value and building costs will have to be paid by you, even though the lender will lend you the money they will still expect you to have some funds towards a down payment on the project.

The amount you will be able to borrow for a self build mortgage will depend on the build and the value of the land on which you choose to build. A lender will be likely to lend you between 25% & 80%.

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Related glossary terms to Self Build Mortgages:
Adverse Credit | Freehold | Leasehold | Building Reports | Equity Release