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Self Build Mortgages – What You Need To Know

Whilst the majority of us would much prefer to buy either a new build or an existing home, some of us have dreams to build our own home and self-builds are becoming increasingly popular. One question which arises time and time again on the subject of self-builds, however, is how they can be financed. It’s common knowledge that a traditional mortgage isn’t intended for those building their own home but what are the options? We asked our mortgage broker, David, to share his insight.

Financing A Self Build

Financing a self-build is a slightly different process when compared to that of securing a mortgage for a ready-built property (even new-builds), given that you’ll need to be funding the project over a series of weeks or months rather than purchasing outright in one lump sum as is usually the case. Most people will, of course, still need to secure a mortgage as they would on any property.
At this moment in time, despite it’s growth, the self-build market is relatively small and, as such, many lenders still don’t offer standard products which meet the criteria. As such, you’ll either need to speak to a number of different lenders or will need to work with a broker who knows who is currently offering self-build mortgages to be able to make the right decision as to who is the most suitable lender.
In all instances, a lender will require to see the final plans for your self-build prior to agreeing a mortgage.

Finance Will Be Released In Stages

One thing which it’s important to understand when applying for a self-build mortgage, however, is that, in most instances, funds will be released in stages as opposed to all up-front as you’d usually expect. This, of course, is to ensure you’re able to fund each stage of the development, however also to allow the lender to carry out frequent checks as to the status and progress of the project and be able to sign off the next release of funds.
Of course, a self-build mortgage comes with a far greater level of administration and involvement than a standard mortgage and this is often reflected in the cost of borrowing which will typically be higher than an everyday residential mortgage. However, on the flip side, you may find you need to borrow less which can cancel out the increased costs.

Ask Yourself Why You’re Self-Building

Above all else, you need to ask yourself why you’re wanting to undertake a self-build and the driving factor should always be that you’re doing it because you want to! Yes, a self-build mortgage may cost a little more, however if you end up with your dream home does it really matter too much? A self-build should be a solution to creating your dream home which you’ll stay in for good and This Money predicts that, upon completion, a home could immediately be worth up to 25% greater than what it cost to build.


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Leeds building Society
Scottish Widows
Business as Usual COVID-19 Update
Currently we are operating as normal, we have put a number of procedures in place to help mitigate the spread and limit the impact on the companies operations. Our staff are fully equipped to work remotely from home to answer your mortgage related questions. Your safety and well-being is of the utmost importance to us and so we are closely monitoring the situation with COVID-19 and the mortgage market. If you have any questions related to a new or existing mortgage then we are a mortgage broker that is happy to help answer them. Thankfully, none of the Search Mortgage Solutions team has been directly affected by COVID-19 and we have taken preventative measures to ensure this remains the case, which includes our staff working from home where necessary.
I want to reassure you that our service will continue to function as normal. All enquiries will still be responded to, and all staff will have full access to all the resources they need.

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