SELF-BUILD MORTGAGE ADVICE
FROM ONLINE HOME IMPROVEMENTS
As with any mortgage, securing them can be a daunting task. With Self Build mortgages the task can be greater still!
Building your own property certainly not an easy task. Project management skills are a pre-requisite to getting it right. If you are confident and do your homework you can get started and go for it. At Online Home Improvements, we provide you a full package of services to ensure you succeed without the headaches of mistakes. Why run the risk and the extreme costs associated with self-build when you can get highly experienced project managers for a low cost which ensures you are on time, on budget and get the dream home. With so much to plan and organise, finding the best deal to first finance your self-build project may slow you down. Our advisers have access to specialist lenders who can prepare your application to increase your chances of being approved. We work with independent specialists and do not charge a commission like most other companies for the assistance as the service forms part of our OHI Self Build Project Management Packages as standard.
Building your own home from start to finish is a dream we would all like to achieve. Your home, your plot, your style and choices to create YOUR perfect home.. It’s likely you will require self-build financing by way of a mortgage for the project. A regular mortgage quite simply will not work for the structured payment requirements.
The option of how you fund your build is your choice. You will require experienced, reputable, skilled professionals to get the job done and to secure finance: architects, planning approval specialists, quantity surveyors, project managers along with an endless list of tradesmen. You may hire a building company/developer to handle the entire project for you, but this is both costly and risky when you are employing a developer to deliver the job. Whatever choices you make, a self-build mortgage can help to fund your dream home. With the OHI Home-Build Package, get all the benefits of our expertise along with the discounts of a trade account you can get nowhere else.
As a mortgage for a self-building is a niche finance, there isn’t a huge amount of information available. Our independent advisers specialise in self-build finance and will guide you through the whole process from start to finish with maximum benefit and minimal effort required from you.
What is a self-build mortgage?
A self-build mortgage is a loan used by you to fund the cost of building a home for yourself. They differ from a regular home mortgage as the property is yet to be constructed. As a result, lenders release funds in stages. Regular mortgage funds are released in one go at the very start.
Key features of self-build mortgages include:
- Only to be used with building your own home
- Can include the purchase of the land (must have planning permission)
- Funds are released in stages
- 70% loan to value
Mortgage funds are released in stages because lenders want to reduce the risk attached to the loan. Lenders are able to lend freely on properties that are already built as they have a property to secure a mortgage against. Where a self-build is concerned, there isn’t a tangible asset as of yet. That’s why money is released throughout the build in intervals. This is to ensure the mortgage is spent accordingly and as agreed in your application.
Which type of self-build mortgage will I need?
There are two types of self-build mortgage:
Arrears – This is where the funds are released after each stage is complete. Having the funds released in arrears can be suitable for those that already have capital in the bank to complete each stage of the build. This is the most common type of self-build mortgage available.
Advance – This is where the funds are released prior to each stage, which can be very useful if you’re slightly strapped for cash. That said, there aren’t many lenders that offer mortgages in advance for self-builds.
It’s important to establish whether your lender will release the capital in advance or arrears so that you can plan correctly.
What are the stages of a self-build?
The stages which funds are released depends on your mortgage lender, however most lenders will release funds at the following stages:
- Purchase of land
- Preliminary foundations works
- Wall plate level/frame erected
- Roofed in (wind and watertight)
- Interior walls finished to plastered stage
- Completion of the works
A lender will send their surveyor out at each payment stage. This is to verify each stage is satisfactory so that the next phase of the build can begin.
If you already have the capital for the build itself, but require a mortgage to fund the purchase of land alone, then it is possible to get a land mortgage. contact us to request an adviser and carry out a free 30 minute consultation to assist in this area.
Self-build mortgage rates
Self-build mortgage rates tend to start at around 4%. Interest rates can go up to around 7% as an overall maximum. The loan to value for self-build mortgages typically starts at 70%, although some lenders may offer 75% of the overall build cost.
Rates for self-build mortgages tend to be higher than traditional mortgages simply because of the risk involved is higher. There’s far less risk involved with mortgages for existing properties. Employing our services to ensure you have done everything correctly will assist greatly in ensuring the bank requirements are achieved and you can secure your finance successfully.
Your specific mortgage lender will need your full project cost analysis with estimates and an average of 20% contingency plan incorporated before discussing your funding. Having the project management and analysis in place is paramount to securing your funding. Our Online Home Improvements packages will assist you with the entire process from start to finish. Be sure you have what is needed to get your project delivered successfully with our assistance from today!
Be sure to consider whether you have included your ongoing overheads such as your rent or or other mortgages while your new home is being constructed.
Banks and building societies are always happy to provide lending facilities to self-build clients, as long as you have carried out a thorough due diligence practice to support your requests, and you are able to demonstrate that a proven, reliable project team and processes are put in place already to complete your project.
There are also other costs to consider when building your own home such as:
- Planning permissions
- Building regulations
- Project Management
- Quantity Surveyors
- Design/Structural Engineers
- Utilities & Communications
- Contractor/builders costs
- Snagging issues
- Legal fees
- Broker fees
One of the main advantages of using a self-build mortgage is that you will save money on stamp duty fees. If the land itself is purchased over £125,000 then you will have to pay stamp duty on the land itself. Nonetheless, you won’t be liable to pay any stamp duty on the actual build or the overall property value once completed.
Timber Frame Projects:
Timber frame projects are attractive for self-build mortgage lenders, as timber frame construction is a fast system, less weather dependent than other home building methods. With advice from Online Home Improvements specialist team advisers, it’s easy to draw up a realistic schedule to meet your mortgage lender’s requirements.
In final, we provide you with independent advice, a full turn key service AND a OHI Trade Account to cover the project management costs by the discounts you get from buying all your products from Online Home Improvements. Why wait – Get started today! Email: [email protected] or click the live chat to request a free 60 minute online consultation
CLICK HERE for independent recommended mortgage lender advice and suppliers specialising in self-build and renovations supplied by Money Facts
CLICK HERE for independent recommended mortgage lender advice and suppliers specialising in self-build and renovations supplied by Prestige Financial Solutions
CLICK HERE for independent recommended mortgage lender advice and suppliers specialising in self-build and renovations supplied by Buildstore