Got plans for a 'Grand Design'?

Self build mortgages

How many of us have dreamed of building our own home? It’s the one way we can be fairly certain of getting it exactly as we want.

However, before getting carried away with the dream of a Grand Design of our own the first thing you would need to figure out is how to finance the build.

Depending on how hands-on you are, you could go the DIY route, where you do most of the work, but bring in the professionals such as electricians or plumbers. Or you can manage/oversee the process and employ the skills of an architect and builder who will do all the work for you. Or contract out the entire project to a contractor who’ll manage the entire project for you.

Whichever way you go about your Grand Design, it’s unlikely you’ll qualify for a standard residential mortgage. This means you’ll need to apply for a self-build mortgage unless have the cash sitting in the bank.

So, what are self-build mortgages?

A self-build mortgage is a loan taken out on a property for the purposes of building it yourself.

Where self-build mortgages differ from a standard residential mortgage is that funds are given to you in stages rather than as a single lump sum. This allows the lender to manage their risk and ensures the money is used as planned and you don’t end up out of funds when you are only part of the way through the project.

As a general rule the first tranche of funds is released when you buy the land, then further tranches when the foundations are laid  and when the property is built up to the eaves level.

The next tranches follow when the roof is watertight and when the interior walls are plastered. The final payment is made on completion.

There are a number of clear advantages to self- building your Grand Design including that stamp duty is only paid on the purchase of the land if it exceeds 125,000 and the final value of the property is often in excess of the costs of building it.

To get your Grand Design off to a grand start, call us today and find out how we can source the right lender for your project.

Image above by PIRO4D from Pixabay

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