Self Build Mortgages
Elevate Financial Solutions is a financial services provider, assisting clients with mortgage advice across the UK. We advise, search and secure all types of mortgages, including self-build mortgages.
What is a self-build mortgage?
If you want to build a home but need capital to do so, you will require a self-build mortgage. You cannot borrow using a residential mortgage to build the property. Self-build mortgages are subject to additional bureaucracy and on-site inspections during the build. The funds are provided in stages throughout the building process, either in advance or in arrears. If you need to purchase the land via the self-build mortgage, around 75% will be advanced at most.
Due to elevated risk, a larger deposit is needed and the rate of interest is typically higher than the standard residential mortgage. Self-build mortgages take longer to be approved - six months is not uncommon.
How is the property value estimated?
The lender will value the proposed property themselves using an appointed valuer. These professionals will judge the viability of your project and assess the finer details, such as the planned materials and construction methods. This valuation will determine the amount of money the lender is prepared to offer you to complete the build.
Going over budget is common among self-builders, which is why the banks may be cautious about lending money to financially ambitious projects.
If you need guidance to secure a self-build mortgage, look no further than Elevate. Our team has advised many self-builders, making their dream self-built property a reality.
The types of self-build mortgages
There are two main types of self-build mortgage. The funds to build the home – as opposed to buying the land - will be paid out during the course of the build as the property develops. However, the funds for each stage may be released in advance (before you complete the next stage) or in arrears (you pay for it and when it is complete the lender reimburses you).
For example, if you were laying the foundations of your building at a cost of £10,000, the bank would give you the £10,000 first (advance) or make you pay for it out of your own money and then give you the £10,000 back once finished and signed off by an inspector (arrears).
Self-build mortgage FAQs
What is the lending criteria?
To secure a self-build mortgage, you will need to have your project and its valuation approved by the lender’s appointed valuer. You are likely to need a bigger deposit, with many lenders preferring you already own the land you intend to build on outright.
What documents do I need to apply for?
Before you apply for a self-build mortgage, you should already possess planning permission. Without permission to build, a lender is unlikely to consider your project. You will need to apply for planning permission from your local authority.
You’ll also need a summary of expected project costs, architect plans, SAP calculation (used to assess and compare the energy and environmental performance of buildings) and more.
Do I switch mortgages once the property is built?
You will be prompted to remortgage to another mortgage type once the build has been completed and signed off. You could choose from a tracker mortgage, fixed-rate deal, offset mortgage or another agreement.
How do bridging loans work?
A bridging loan is a type of loan that will help you fund the build while you wait for other money to come in. For example, if you were waiting for a property to sell with an agreement made, you might use a bridging loan to begin laying the foundations on your self-build project.
Why use an adviser to help find a self-build mortgage?
Building a bespoke home exactly how you want it is a dream that only a few of us get to experience. But to achieve that dream, you must go through an arduous process and navigate one of the most complex types of mortgage agreements. The process can be smoother and less stressful with the support of a professional mortgage adviser.
If you plan on building a home, get expert guidance from one of the Elevate mortgage advice team.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Elevate Financial Solutions is a financial services provider, assisting clients with mortgage advice across the UK. We advise, search and secure all types of mortgages, including self-build mortgages.
What is a self-build mortgage?
If you want to build a home but need capital to do so, you will require a self-build mortgage. You cannot borrow using a residential mortgage to build the property. Self-build mortgages are subject to additional bureaucracy and on-site inspections during the build. The funds are provided in stages throughout the building process, either in advance or in arrears. If you need to purchase the land via the self-build mortgage, around 75% will be advanced at most.
Due to elevated risk, a larger deposit is needed and the rate of interest is typically higher than the standard residential mortgage. Self-build mortgages take longer to be approved - six months is not uncommon.
How is the property value estimated?
The lender will value the proposed property themselves using an appointed valuer. These professionals will judge the viability of your project and assess the finer details, such as the planned materials and construction methods. This valuation will determine the amount of money the lender is prepared to offer you to complete the build.
Going over budget is common among self-builders, which is why the banks may be cautious about lending money to financially ambitious projects.
If you need guidance to secure a self-build mortgage, look no further than Elevate. Our team has advised many self-builders, making their dream self-built property a reality.
The types of self-build mortgages
There are two main types of self-build mortgage. The funds to build the home – as opposed to buying the land - will be paid out during the course of the build as the property develops. However, the funds for each stage may be released in advance (before you complete the next stage) or in arrears (you pay for it and when it is complete the lender reimburses you).
For example, if you were laying the foundations of your building at a cost of £10,000, the bank would give you the £10,000 first (advance) or make you pay for it out of your own money and then give you the £10,000 back once finished and signed off by an inspector (arrears).
Self-build mortgage FAQs
What is the lending criteria?
To secure a self-build mortgage, you will need to have your project and its valuation approved by the lender’s appointed valuer. You are likely to need a bigger deposit, with many lenders preferring you already own the land you intend to build on outright.
What documents do I need to apply for?
Before you apply for a self-build mortgage, you should already possess planning permission. Without permission to build, a lender is unlikely to consider your project. You will need to apply for planning permission from your local authority.
You’ll also need a summary of expected project costs, architect plans, SAP calculation (used to assess and compare the energy and environmental performance of buildings) and more.
Do I switch mortgages once the property is built?
You will be prompted to remortgage to another mortgage type once the build has been completed and signed off. You could choose from a tracker mortgage, fixed-rate deal, offset mortgage or another agreement.
How do bridging loans work?
A bridging loan is a type of loan that will help you fund the build while you wait for other money to come in. For example, if you were waiting for a property to sell with an agreement made, you might use a bridging loan to begin laying the foundations on your self-build project.
Why use an adviser to help find a self-build mortgage?
Building a bespoke home exactly how you want it is a dream that only a few of us get to experience. But to achieve that dream, you must go through an arduous process and navigate one of the most complex types of mortgage agreements. The process can be smoother and less stressful with the support of a professional mortgage adviser.
If you plan on building a home, get expert guidance from one of the Elevate mortgage advice team.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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