Mortgages & Home Finance Self Build Mortgages: The Guide

Date Published:

30/09/2008

Who Lends?

You can shop around for a self build mortgage as you would with a traditional mortgages. Some 33 lenders currently offer self build deals, according to financial stats provider Moneyfacts but others will consider self build loans on an individual basis, so it’s worth approaching your current lender or bank.

You can choose from a wide range of mortgages products including tracker and fixed rate. Current self build mortgages rates range from six per cent to eight per cent. Rates are changing quickly, although not as quickly as the mainstream markets.

The Cost Of Setting Up Your Self Build Mortgage

If you use a mortgage broker to find and arrange your self-build loan, then it’s likely you’ll have to pay a fee around £200 to £300. Typically you will also have to pay a £300 fee for a lender’s valuation on the plot.

If you opt for an arrears staging mortgage you’ll have to pay a £200 arrangement fee. Then each stage inspection will cost around £75. If you opt for the advance system you will have to pay a £295 arrangement fee, however you won’t have to budget for stage inspection fees.

You will also need to consider how you will pay for your living arrangements during the project which can take a year or more to finish.

‘Bear in mind you’ll need to pay a mortgage on the unfinished property as well as rent or mortgage on your current address,’ says Ray Boulger of John Charcol. ‘You will only pay interest on the self build mortgage on the amount drawn down and so payments on the mortgage will increase as the work progresses. So the quicker the build is completed, the more efficient it is from a financing perspective,’ he adds.

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