Self Build Mortgages :
What is a self build mortgage?

A self build mortgage (or an advance stage payment mortgage, as it is also known) is a type of home mortgage loan that enables you to purchase a plot of land and finance a self build house.

This type of mortgage loan has surged in popularity over the last few years as more people like the idea of building their dream home, or they undertake a major renovation, extension or conversion.

Once you have bought your plot of land, bought materials at wholesale rates and employed labour directly, you are effectively buying a house at cost price and getting better value for money.

How does a self build mortgage work?
The main difference between a house purchase mortgage and a self build mortgage is with a self build, the money is released in stages rather than as one big lump sum.

A self build mortgage provider will typically allow you to borrow 75% of the cost of the value of the house as the project progresses. However, this does depend on the chosen lender.

One mortgage lender will even lend up to 95% of funds up front so that you have the money available to pay for materials.

The money can be released either at the beginning or at the end of each stage of the building. Choosing to have the money released at the end of each stage once the valuer has visited, can lead to cashflow problems. Therefore, the option of having the money released before each stage has completed is very popular.

Stages of a self build
Below is an illustration of the stages at which money is released when building a typical Brick & Block property:

1. Purchase of land
2. Preliminary costs and foundations
3. Wall plate level
4. Wind and watertight
5. First fix and plastering
6. Second fix to completion.

How to find the best self build mortgage
Thanks to growing demand, an increasing number of mortgage lenders are offering self build mortgages at more competitive rates.

It is important to find the best mortgage that accommodates your individual needs, as taking out a mortgage is a big commitment. If you consult a reputable mortgage broker, they will lead you through the maze and take a lot of the headache out of your self build mortgage, leaving you to concentrate on the task in hand.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.