The Which? Mortgage Advisers service for self-build mortgages
Building your own home is not for the faint-hearted. And on top of everything else, you’ll need to take out a special self-build mortgage to finance it. Our handy self-build guide walks you through the self-build process step-by-step, from finding land to hiring professionals to help you.
As you might expect, self-build mortgages work differently from house purchase mortgages. Rather than getting all the cash upfront, your lender will release it in stages to fund the construction. These stages might include buying the land, right through to decorating the interior – and everything in between.
To make things more complicated, your lender may want to pay after each construction stage is successfully completed. Of course, most borrowers prefer payment in advance, as it puts less financial strain on them, but not all lenders will agree to it. It’s another aspect of your planning that will need careful thinking and a thorough assessment of what your lender is prepared to offer.
Your deposit and your plans
Because self-build mortgages are relatively risky for the lender you will need a deposit of at least 30% – and the most attractive deals require 40% or more.
Most lenders will also expect you to have all the relevant planning permission in place before you approach them, and to see detailed plans. They will expect you to employ professional builders and other contractors rather than doing the work yourself. It’s a good idea to build in a contingency budget of around 10% to cover the cost of any unexpected expenses.
There’s no doubt that self-build projects can involve extra risks and headaches. But with the kind of clear planning Which? Mortgage Advisers offers, you’ll be more likely to achieve your dream home and enjoy the rewards.