Self-Build projects have been thrust into the minds of people through Property Programs such as Channel 4’s Grand Designs and although the ultimate reward is a unique property, there are many things which need to be considered before applying for a self-build loan.
Apart from a venture fraught with difficulties and the pit falls associated with it, it is also a high financial risk to the lenders who as a result will want every detail of the project in place before they will consider lending.
Self-Build mortgages are difficult to finance and require specialist advice which Brilliant Money can assist with. For most people getting their finances in order is an important starting point for their self-build project. If you need to borrow money, then finding the right mortgage for your build is essential 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 us to discuss your options as early in your project as possible.
For self-build projects full and detailed plans of the project will need to be produced along with a detailed costs breakdown and schedule of works. These will be required to be produced in order for a provider to consider lending on such a property and the lender will quite often only release funds in stages with one stage having to be fully completed and inspected before the second stage’s money being released. Planning permission and building regulations will be required prior to purchase of the land and an NHBC or Architect’s Certificate will be required for the project.
The alternative to this is an advance mortgage where the money is released at the start of each stage in advance and once completed signed off by a valuer. Each lender has different rules governing its rules of release of money for self-build properties. These lenders may also insist on contractors completing the work instead of yourself. At the end of the self-build project you may want to review your Interest Rate as Self-Build Mortgages often attract higher rate of interest than conventional mortgages.
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