Are you dreaming of a home tailored exactly to your needs and tastes? A self-build project might be the perfect route for you. Unlike purchasing a pre-existing property, building your own home offers you the opportunity to create a living space that reflects your personal style. However, financing such a project comes with unique challenges and requires a specialist product: the self-build mortgage.
What is a Self-Build Mortgage?
A self-build mortgage is designed to help you build a home from scratch. Unlike traditional mortgages, where the funds are released in a single lump sum, self-build mortgages release funds in stages. These stages align with key phases of the construction process, such as purchasing the land, laying the foundations, and completing the structural work.
How does it work?
The staged release of funds in a self-build mortgage reduces financial risk for lenders and ensures that you use the money effectively at each step of the build.
1. Land purchase
The initial funds are released to buy the land. Some lenders may require you to already own the land outright or have a significant deposit.
2. Preliminary work
Funds for groundwork and initial construction are released next. This stage includes laying foundations and initial infrastructure.
3. Structural work
Further funds are released for erecting the main structure of the house. This covers the build up to a weatherproof stage, including walls and roof.
4. Interior and finishing touches
The final stage releases funds for internal work, such as plastering, plumbing, electrics, and decorating.
The specific stages and release amounts can vary between lenders, so it’s essential to understand the terms of the specialist mortgage product you choose.
Benefits of a self-build
Customise your own home
The primary benefit is the ability to design and build a home that meets your exact specifications. From the layout to the materials used, every aspect can be tailored to your preferences.
Potential cost savings
Building a home can be more cost-effective than buying a pre-existing one. By managing the build yourself, you can avoid the developer’s profit margin and potentially add significant value to the property.
Modern standards
New builds often incorporate the latest building regulations and energy efficiency standards, potentially saving on long-term energy costs.
Increased value
A well-executed self-build can increase the property's market value, offering a significant return on investment.
Challenges to consider
Commitment
Self-build projects require a significant time commitment and project management skills. Coordinating contractors, managing budgets, and ensuring the build stays on schedule can be demanding.
Upfront costs
While self-build mortgages release funds in stages, you need to have a financial cushion to cover costs that arise before each stage’s release, such as land deposits and preliminary work.
Planning permission & building regulations
Securing the necessary planning permissions and adhering to building regulations can be a lengthy and complex process. It’s crucial to account for this in your project timeline.
Risk of overruns
Budget and time overruns are common in self-build projects. Unexpected challenges, such as adverse weather or supply chain issues, can lead to increased costs and delays.
Finding the right specialist mortgage broker to help you
When considering a self-build mortgage, it’s vital to find an experienced and specialist independent mortgage broker. They will be able to source lenders who offer flexible terms, competitive rates, and support you throughout the build process. They can help you navigate the different products available and find a mortgage tailored to your needs.
Ready to start building your dream home?
Start your self-build journey with confidence and excitement when you choose Skyline Mortgage Consultants.
Book an online self-build mortgage appointment today to explore your self-build mortgage options and take the first step towards your self-build journey with confidence and excitement.
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The amount will depend on your circumstances.
Skyline Mortgage Consultants Limited is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Skyline Mortgage Consultants LTD is registered in England and Wales Number 8157062. Company Registered Office: Heathmans House, 19 Heathmans Road, London SW6 4TJ.