Best Mortgage Deals
Advice, help, information and guidance on the best mortgage deals available

Self Build Mortgages

best mortgage deals by AnnaNow for your dream home, you definitely want to find the best mortgage deals available. Building your own home has become increasingly popular in recent years with soaring property prices making it harder than ever to get ahead in the property market.

Self build provides the ideal alternative to the more conventional method of owning your own home - not only do you get the house you want, but with clever design and project management you should be sitting on a sizeable profit as well. Typically self build costs can be 30% to 40% cheaper than buying an existing house! So what mortgages are available for the self builders and how do they vary from more conventional mortgages ? - let's take a look.

Best Mortgage Deals - Self Build Mortgages Explained

A self build mortgage is exactly what it says - a mortgage which provides the financing for building your own home. The primary difference however is that the funds are released in stages as the project progresses, rather than in one lump sum with a conventional mortgage.

Now with all self build projects there are two elements to consider. Firstly we have the land costs, and secondly the build itself. Lenders will typically lend around 75% of the land value and build costs, although others will go as high as 95% on the basis that the finished house will have the 30% to 40% developers profit already built in to the property ( assuming you stick to your budget!)

There are two methods by which the money can be released during the build – at the end of each stage or at the start of each stage. These are known as arrears stage payments and advance stage payments respectively. In the arrears stage payment method, the money for that stage is released after the stage has been completed and a valuer has visited the site. This can cause some self builders to have cash flow difficulties. The advance stage payment method is a more recent development. With this method the money required for that stage is released at the start of the stage before work starts. This advance payment mortgage has become very popular as it gives positive cash flow during the build, and the high percentage lending of 95% of the cost of the build , makes it is easier to stay in your current house while the build progresses. I think these are some of the best mortgage deals available.

Best Mortgage Deals - The Mechanics Of Self Build

Many people dream of building their own home, but for many this is a far they get. Talk to anyone who has done it ( I have tried) and the biggest problem is finding the plot - this can take months or even years. Having found the plot the next issue is whether to live on site, or keep your existing home while the build continues. If you want to stay in your current home while the new one is built, you will need to find out what the lender's attitude will be to any outstanding mortgage on your existing property. You also, need to ensure that you have enough income to cover both mortgages.

About 20,000 people build their own homes in the UK each year and this number is rising. Over 30 banks and building societies currently offer mortgages to self-builders. Typically you should be able to get between 25% and 80% of the value of the building plot, and between 65% and 95% of the costs of the building.

Best Mortgage Deals - The Budget

One of the most important aspects in getting the best mortgage deals for the self builder is the budget. Before approaching any lenders, make sure you have planned your budget in detail, and make sure you have covered all the costs. Don't forget to include professional fees and mortgage costs which can often be overlooked. In addition make sure you decide in advance whether you have the time and expertise to manage the project yourself, or to employ a full time project manager. Project managing yourself will save 10% to 15% of the build costs, but get it wrong and it could end up costing you a great deal more, so think carefully!

Finally let's look at how to find the best deals if you are looking for a council right to buy  mortgage.

Best Mortgage Deals - next page