Self-build mortgages explained.

Any home owner knows that going through the mortgage process can be a complicated one. There’s a number of different criteria and as well as affordability rules to contend with. For self-builders this process can be a bit more challenging as there are more things to consider when applying for a self- build mortgage. Where will you live during the build, how will you afford those costs while building?

Self-build mortgages have become more accessible to a wider range of people. This will make your dream of building your own home more achievable. We have put together the information you need to know about the different kinds of self-build mortgages.

Advanced Stage Payment Mortgages:

-Advanced payment mortgages are when funds are released prior to each stage of the build. These mortgages provide guaranteed stage payments based on your costs before each phase of the build.

-These types are mortgages are better suited to customers who are living in a home that you don’t want to sell or if you don’t have a vast amount of savings to fall back on. Additionally, it offers certainty in your budget and peace of mind that you can pay your bills on time.

-This is a great option if you are looking to have a frame constructed offsite and then delivered as usually these businesses require payments in stages. For example; our oak frames are constructed at our workshop in Caersws and then delivered to your build site.

-Another plus point to advance payment mortgages is that you only need a 5% deposit to get the build started, and the stage payments are always guaranteed.

Arrears Stage Mortgages:

-Arrears stage mortgages are slightly different to advanced payment mortgages as lenders release funds after each stage of the building work is completed. The process relies on an evaluator to come out and assess the workmanship and show an uplift in value. The completed evaluations will then have an impact on how much the lender pays out.

-This type of mortgages is more suitable for those who have access to cash funds to keep the project going or have a vast amount of savings to tap into.

-With this type of mortgage there is an element of risk involved. It can cause cash flow issues and add delays to the build, as the stage payments aren’t always guaranteed.

Things to remember about self-build mortgages:

-Research- make sure your research the different types of self-build mortgages that are available and the different requirements involved.

-Speak to a specialist mortgage adviser – There are companies out there that specialise in self-build mortgages. It is worth having a chat with one to try and find the right product that suits your build and finances.

-Getting a self-build mortgage can take time and should be factor into your build times. It can take anywhere between 8-12 weeks to achieve a mortgage, this can vary on whether you have all the correct documentation.

-Some self-build mortgage lenders might also ask to see a 10-year structural warranty if you are building a new build.

-A self-build mortgage application will require you to provide plans and a breakdown of build costs, including your plot costs.

-It’s worth allowing for a contingency fund for any problems you may encounter along the way

-Ask lenders if you can switch to a lower rate interest once the property is habitable.

If you are looking for more information on self-build mortgages then take a look buildstore.co.uk . Here you will find plenty more information to help you finance your self-build or renovation dreams.