Self build mortgages are available from a wide range of lenders with varying deals being offered from mortgage companies: some will lend you funds in advance of your land purchase and the start of the build, others may offer more completive deals in terms of fees and interest rates but they may only release cash in arrears after certain works have been completed. Your Mortgage broker will be in a better position to advise you of which deal will suit your circumstances.
One thing is for sure, self build mortgages generally require a lot more paperwork to get a mortgage offer than a standard mortgage application. Some of the paperwork that a self build mortgage lender will require ahead of a mortgage offer is as follows:
Self Build Requirements
- A full size copy of the plans showing the floor plans and elevations
- Copy of Detailed Planning Permission
- Copy of Building Regulation approval if in place
- Full Name, address, qualifications of the Architect and a copy of their Public Indemnity cover.
The above list is the minimum additional information that the self build lender will require in addition to the standard application requirements such as proof of I.D., proof of income etc.
Not all self build mortgage lenders will offer you a mortgage for a Barn Conversion so check with your mortgage broker to ensure that the deal quoted caters for this type of self build project
How is the money for a Self Build released?
As a rough guide most lenders will pay a percentage of the land cost, let’s assume 75% for this example. Then at different stages of the build such as the foundation level, first floor level, roof level and completion will pay a further 75% for the work completed at each stage based on a current valuation of the property. The lender will ask for a valuation to be carried out each time they release funds to ensure the project is on track – this valuation fee is a lot lower than you may expect as the lender realizes that you will have to have at least 3 other valuations throughout the build.
What types of Mortgage Deals are available?
Some lenders specialize in self build mortgages only and their range of mortgage deals reflects this. There are a few high street bank s and building societies that will also offer you a mortgage deal based on their standard range of mortgage products which can be better value if you meet their lending criteria. Fixed rates, tracker deals and variable rates will all be available, some will come with redemption penalties in the first two years and others may be penalty free allowing you to finish the build and remortgage to a standard mortgage deal upon completion.
The criteria for a self build mortgage is quite similar to that of a standard mortgage, you will need to prove your income and satisfy to the lender that you can afford the mortgage that you are taking on. Your mortgage Broker will be able to assist with these preliminary checks ahead of submitting a new mortgage application and incurring any fees and charges.