Self-Build Mortgage Advice
If you have always dreamt of building your own home, then a self-build mortgage could be the path to this becoming a reality. A self-build mortgage allows you to access a loan to fund a property you are having built for yourself. Unlike a traditional residential mortgage where the total borrowing amount is lent at the outset, a self-build mortgage operates to provide funding in stages as the build project progresses through appropriate stages. Interest rates on self-build mortgages are usually higher than that of a traditional residential mortgage.
We work with specialist lenders to secure the best self-build mortgage deals, ensuring you have the necessary funding at every stage. Our experienced advisers help you navigate the complexities of self-build financing, from land purchase through to final completion.
Release of Funds
Funds for self-build mortgages are released in pre-agreed stages of the building project, most commonly in arrears, after each stage is completed. In some instances funds may be released in advance, before each stage begins – where the borrower(s) do not have significant initial capital. Stages for release of funds would typically be; purchase of land, preliminary costs, foundation / groundworks, main structure (walls and roofing), wind & watertight, first-fix and second fix / completion. Our Advisers are able to talk you through these stages and determine what the options available to you may be.
When is a Self-build Mortgage Appropriate
A self-build mortgage may be the appropriate solution if you are considering building your own property from scratch. It may also be an option if you are looking to convert an existing building to a residential property, ie barn, church or commercial premises, or if you are doing significant or major renovation to your existing residential property. It may also be suitable if you are purchasing an uninhabitable property to renovate or remodel. Finally, if you are buying an existing plot with a property which you intend to knock down and rebuild it may be a viable option.
Criteria and Eligibility
Most lenders will require a deposit of between 25% – 40% in order to lend on a self-build project and will usually require the build to be completed within 12 – 24 months.
In addition, they will require the borrower to have; full planning permission, a complete build schedule (including contingency budget, typically 10 – 15%) and full breakdown of building costs. They may also require you to have site insurance, a structural warranty and a form of public liability insurance, if you are using contractors. They will require a valuation of the plot on which you propose to build, as well as a forecast of the completed property value.
Early in the process, our Advisers will discuss with you the requirements around general eligibility and affordability to determine if self-build is appropriate for your own circumstances.
Post-build Completion
After the completion of the building of the property, it would be typical to transfer the loan to a standard residential mortgage (as this will normally be at a lower rate of interest), if you intend to reside in the property. Our Advisers can support you in this and define with you the correct time and options to do this. If the property is to be sold, then our Advisers will already have discussed an exit strategy with you and this can then be actioned.
Summary and "why choose Evolve"
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