Self-Build Mortgages

If you’ve been planning a self-build for many years and are finally ready to take that all-important first step, you’ll need a self-build mortgage. This differs to the regular mortgages offered to buyers who are looking at properties already on the housing market. So, let’s find out more.

What is a self-build mortgage?

Building a custom home can be a fun, rewarding and highly exciting experience – if not slightly nerve-wracking at the same time. There are many things to think about, but before you get to work it’s important to have your finances in place, and that’s where a self-build mortgage comes into play.

Essentially, this is a home loan taken out on a building you want to create. Unlike a traditional home mortgage where you’ll receive all of the money in a lump sum, self-build mortgages are different. Instead, you’ll receive the agreed sum in instalments to reduce the lender’s risk and ensure you spend the money as planned. Of course, when building a new property, it can be easy to get carried away and go over budget, so a step-by step approach is needed.

When will I get my self-build mortgage instalments?

Every lender is different, so you should discuss the finer details of your mortgage agreement before signing any paperwork. That said; when it comes to custom house building, money is paid in instalments and usually after each stage of the build has been completed and assessed. In general, you’ll get the first payment after buying a plot of land and another when the foundations are laid. You’ll then get another instalment when the property is built up to eaves level, another when the roof is watertight and another when the interior walls have been plastered. The final payment is made on completion of the property.

What type of self-build mortgages are available?

Whether you’re planning to do all the work yourself, or contact professional builders, designers and architectural services, knowing the type of self-build mortgages available will help you to make an informed decision. Firstly, there are many different mortgage providers, offering different rates, so comparing and contrasting agreements is vital. Secondly, you should look at the payment structure of the mortgage. While most mortgage providers pay out at the end of each stage to reduce risk on their side, some will pay out at the beginning of each building process. This can be particularly useful if you don’t have the funds to pay for work upfront.

What’s the benefit of a self-build mortgage?

One of the benefits of a self-build mortgage is the savings you can make on stamp duty. Essentially, there’s no stamp duty on the cost of the building work or the value of the property once it’s completed. The only time you’ll need to pay stamp duty is if your plot of land exceeds £125,000.

If you’re looking for reputable architects, contact Bluelime Home Design today to find out more about the services available and to arrange a free architect consultation. Covering areas including  DartfordBromleyBexleyErith and Croydon, Bluelime Home Design can also carry out loft conversions, home extensions, kitchen designs, bathroom renovations and more.

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