Building the home of your dreams

As our name suggests, this is a type of mortgage we love.

The self-build process involves a few stages from acquiring a site, obtaining planning permission for your house type to engaging with Builders & Engineers. The self build mortgage process includes stages of funding and structured payments throughout the construction, with flexibility based on individual needs and requirements for certifying each build stage before payments are released.

Building your own home from scratch may take considerably longer and be more stressful, but would you expect it any other way when your building the home of your dreams.

Think about dealing with architects, builders, planning permissions, surveyors and councils. Self Builds are not for everyone, but at least you can rely on The Mortgage Architect to be with you every step of the way when it comes to financing the process.

What is a Self-Build Mortgage?

A self-build mortgage is a specialized type of mortgage designed for individuals who want to build their own home. Unlike traditional mortgages, which release funds in a lump sum, self-build mortgages provide funds in stages as the construction progresses. These stage payments align with key milestones in the building process, ensuring that you have the necessary funds at each phase of your project.

This type of mortgage requires a detailed plan and budget, making it ideal for those who want complete control over the design and construction of their home. With a self-build mortgage, you can truly bring your vision of the perfect home to life.

How Much Can You Borrow with a Self-Build Mortgage?

The amount you can borrow with a self-build mortgage depends on several factors, including the value of the land, the estimated construction costs, and your financial profile. Typically, lenders will offer up to 100% of the total construction cost, though some lenders may vary.

Your deposit can be in the form of cash or the value of the land you own. It’s important to have a realistic budget and ensure that you can comfortably afford the repayments throughout the construction process.

The Self Build Mortgage Process

Generally, mortgage lenders will advance up to 80% of the cost of buying the site and 100% of the building cost. However, the above does vary depending on the lender. That is why we would recommend you to engage with The Mortgage Architect.

Your Site can be your deposit – if site is gifted or already owned, you may borrow up to 100% of the Build Costs.

Approval-in-Principle - Mortgage approval in principle can be granted without full planning permission and costings. It would be primarily based on incomes. Obtaining mortgage approval in principle is crucial as it provides a clearer understanding of your financial capabilities and the lending criteria that will affect your application.

Letter of offer – This will require us to have all the self-build documents. These would include final Grant of Planning Permission, Full Costings or Fixed Price Contract and details of Supervising Engineer.

Mortgage drawdown in Stages: Due to the nature of self-build’s, your mortgage funds are paid out in stages as the project progresses. In most cases the payments would be split between 5 & 6 stages.

Consulting a mortgage broker can greatly enhance the mortgage process, especially for those looking to build their own home or navigate different lending criteria.

Self-Build Options - Direct Labour vs Contract

The choice is entirely yours, but you might want to consider certain factors first.

Self builders have various options available, such as managing the project through direct labour or hiring a contractor.

Direct Labour

With direct labour, you are fully in charge which can be both good and bad depending on your experience. Under the supervision of your appointed architect, you will manage contracts with workers throughout the various elements of the build from foundations to finishing touches. Do you know how to arrange for your drainage and sewage, plastering, roofing, etc.? If this sounds like a daunting task, you might prefer to employ a professional builder to carry out the build for you. Managing a self-build is not an easy undertaking and may require a lot of time and dedication on your part. Borrowers only pay interest on the amount drawn down during the construction of their home.

Contract

If you found the direct labour option above too hard, then a building contract might be for you. A professional construction company will take over the building project under the supervision of your architect. Furthermore, your architect might recommend a builder. You can go a step further and hire a project manager. This will ensure a smooth process and even pay for itself in the long run.

Additionally, understanding current mortgage interest rates can help you make informed decisions about financing your project, as these rates impact the overall cost and options available for mortgage financing.

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