Self Build Mortgages

If you are looking to build your own property or to carry out a renovation on an existing property, you will need to look into self build mortgages, as opposed to standard residential mortgages. Although the basics are much the same, in that the amount you can borrow will be determined by your income (whether individual or joint) and that you will have the option to fix your mortgage rate, track the Bank of England base rate or get an introductory discounted rate for an agreed period of time, there are some additional restrictions that you should bear in mind when carrying out your initial search for the best self build mortgages in the market.

For example, some self build mortgages are 'arrears' mortgages, meaning that you will get the money after the work has been completed and checked by an expert appointed by the lender. This means you must make sure the contractors you employ are aware of this at the start of the work, to avoid any potential issues. Also, you may find that there are age and minimum income restrictions, to enable the lender to guard against you being financially unable to complete the property build. Self build mortgages should make allowances for the many peripheral costs associated with building a property, including planning permission applications, insurance costs (including site insurance while the work is being carried out) and funds to allow for the project running over budget. Check with your mortgage broker to see whether you can include an extra amount in your mortgage loan to cover these additional expenses.

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The facts about Self Build Mortgages

• Self build mortgages can fall under the same home loan categories as standard residential mortgages, including repayment or interest only, fixed, capped, tracker and variable rate options.
• A minimum age, often 25, will often apply, as will a minimum income restriction on the main earner.
• Depending on the size of your deposit and your credit rating, you may be able to borrow enough to cover additional costs associated with a new build, such as planning permission.
• If the build is unusual i.e. conversion of a non-residential building that may have limited scope for resale, a higher deposit is often required against the property value.