Self Build Mortgages

Self Build Mortgages

For most people getting finances sorted is an important starting point for their self build mortgage project. If you need to borrow money then finding the right mortgage for your build is vital to ensuring the success of the project. A mortgage for a self build differs from a mortgage you would use to buy a house because with a self build mortgage the money is released in stages as the build progresses.  There are however different ways in which this money can be released and your choice of product will depend on your own particular circumstances.  This is why it is important to speak to a self build finance expert to discuss your options as early in your project as possible.

Mortgage Chain is the UK’s leading expert in self build mortgage advice and we have a team of experts who have worked with well known banks and building societies to create a panel of self build mortgage lenders to help you find the ideal way of financing your project.

Whatever your needs you can be assured that the expert advisers at Mortgage Chain will discuss your requirements in detail and will only recommend a particular product or lender once they have fully understood your circumstances.

Mortgage Chain can access a wide variety of self build mortgages from the top lenders as well as an exclusive Accelerator Mortgage Scheme with the most popular self build provider on the current market, who have helped over 15,000 people finance their self build dream.

How Self Build Mortgages Work

The main difference between a self build mortgage and a house purchase mortgage is that with a self build mortgage money is released in stages as the build progresses rather than as a single amount.

Lady with calculator and formsEvery self build project has identifiable stages from the initial digging of the foundations to the final fix and at each stage the value of the build increases.  The following chart shows the typical stages in a traditional brick and block construction and in a timber frame construction.

Brick & Block Timber Frame
Purchase of land Purchase of land
Preliminary costs & foundations Preliminary costs & foundations
Wall plate level Timber frame kit erected
Wind & watertight Wind & watertight
First fix & plastering First fix & plastering
Second fix to completion Second fix to completion

There are two types of self build mortgage each defined by when you get money during the build.  They are called advance and arrears and each are described below.

The traditional type of self build mortgage is on an ‘arrears’ basis.  With this type, the lender will release money to buy the plot, usually between 50% to 85% of the purchase price or value of the land and then will release the money for the build in stages to correspond with the build stages outlined above.   The money for each stage is paid out at the end of the stage once the work has been completed and a valuer has visited the site i.e. in arrears of the work being done.

An arrears self build mortgage is best suited to self builders who have sufficient savings to fund the early stages of the build as well as sufficient savings for the deposit on the land.  For example, if you already own the plot of land and can remortgage it to provide the funds to start the build or if you have already sold your existing house and have cash available to buy the land and start the build then an arrears mortgage may be the best option for you.

However, at Mortgage Chain we recognise that not every self builder has access to the cash required to pay the deposit on the land and the first build stages so can provide alternative option such as – the Accelerator Mortgage Scheme with a lender we work closely with.  Here money is released for each stage of the build at the beginning rather than the end of the stage giving you the cash you need to buy materials and pay your builder.  It also lends a generous percentage of the costs – up to 90% of the cost of the land and up to 90% of the cost of the build.

Accelerator is ideal for many situations, for example if you have only a small amount of cash available and don’t want to sell your existing house to release equity before your new one is complete or if you want to keep the cash you have available until later in the project to maintain a good contingency fund.

Mortgage chain have access to all the types of self build mortgage, both advance and arrears, as well as advising on the best type of finance for self build projects.  So to make sure you get the best advice give us a call today on to discuss your specific requirements and we can help you choose the most suitable way of financing your dream home.

Chelmsford, Essex:

> 01245 408 569

Liverpool Street, London:

> 020 3701 9787