Self-Build Mortgages

If you’ve had enough of living to a developer’s specifications and want to build your own dream home, you’ll find a conventional mortgage simply won’t do. Instead, you’ll need to find a specialist self-build mortgage that only certain lenders will be able to offer.

What are self-build mortgages?

As the name suggests, this is a specific type of mortgage designed for people who want to build a new home. The main difference between this type of mortgage and a standard home loan is that the funds are given to you in stages, rather than as a single lump sum. This is an effective method of reducing the lender’s risk and ensuring you don’t deviate too much from your original plans, or run out off money half way through.


Generally speaking, you’ll receive the mortgage payments as follows (this is only a guide and some lenders will vary):

– The first instalment to buy the land
– The second instalment when the foundations are laid
– The third instalment when the property is built to the eaves
– The fourth instalment when the roof is watertight and the walls are plastered
– The final instalment on completion

What should you look for?

As with every different type of mortgage, the specifics of the deal with vary from lender to lender. Before you sign on the dotted line, make sure you know when the payment for each stage of the build will be made. Some lenders will only pay once each stage has been completed and valued, while other lenders will release the money at the beginning of each stage. This can be particularly useful if you don’t have enough money to pay the builders upfront.

Despite working with advisors who specialise in securing self-build mortgage deals, the rates you’ll receive will typically be higher than those on a standard mortgage. When trying to find the best deal in such a niche area, it really does pay to work with an expert who knows exactly which lenders to approach

What are the benefits of a self-build mortgage?

There are also cost savings associated with this type of mortgage. There’s no stamp duty on the cost of the building work, or on the final value of the property once it’s complete. Duty is only payable on self-builds if the cost of the land exceeds £125,000.

You can also expect to make significant gains when building your own new home, as the cost of construction is often far lower than the property’s final value.

How can we help?

We can put you in touch with mortgage advisors with specific knowledge in this field. Not only do they know where to turn to find the right deal, but they can also assist with the property plans and cost projections most lenders will want to see before accepting your application.

Even if you’re looking for self-build mortgages with bad credit, our advisors may still be able to help. The initial consultation is without charge and free from no-obligation, so complete an enquiry form today.

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