Self Build Mortgages
January 13, 2014
Design & Build Projects, Bespoke Homes, Concept To Completion Service, Project Management, Essex
People considering building their own homes can receive help and advice from an increasing number of sources, instilling confidence about their bespoke home vision. As more and more people embark upon and complete their own self build, passing on their experiences to self build newbies, valuable lessons are learnt. The self build climate is optimistic, with encouraging aspects like UK government financial backing, dedicated organisations and purpose designed websites. A growing number of building companies have recognised the extent of this popular area within the property market, and are now offering self build as a significant part of their business. Companies such as Multi Building Services Ltd, in Essex, offer a concept to completion self build service, including designing, planning and even project management of their self build. This takes away the stress of having to keep on top of work that you may not understand and a variety of contractors you dont know. Self building your home can be an extremely enjoyable process, as long as you follow certain steps to ensure a satisfactory outcome.
Building your own home can work out cheaper than buying a similar property, though it is difficult to find one available to ideally suit you and your families exact needs and wants. Many lenders are offering self build mortgage deals up and down the country, with varying deposits, rates and terms depending on planning permissions and what stage the building is at.
Some important pointers for self builders include things like, shopping around between building societies for the best self build mortgage deal before the market becomes saturated. Your self-build mortgage lender will need to assess the whole project and not just your financial situation, they will then give you a likely forecast. Planning permission and property plans will need to be examined, so its a good idea to talk to the experts and obtain an end value. Your current financial commitments like existing mortgage or rental agreement will be taken into account, the lender can then determine your borrowing rate. Remember when calculating cost, that you will need somewhere to live during the build.
How much can you borrow?
You can borrow 75% of the price of the land you wish to buy, and a further 75% to cover build costs based on its predicted end value. In the case of you already owning the land or property, you are allowed to borrow against the value of this, meaning you can borrow more of the build costs.
Check that you are able to access any needed savings, and if you are selling your existing home, make sure your mortgage is not subject to early repayment charges.
The application process can take around 5 months, and require details on plans for the property, cost projection and planning permission proof. The lender will want to know which companies and materials are being used, and factors like build type, location, construction method and schedule of costs. Money is usually released in stages on an arrears basis, and lenders may monitor how the build is proceeding. Some lenders will offer an advanced mortgage, paying ahead of each stage, once it is signed off by the valuer.
Each lender has its own particular rules and regulations, and once the build is complete you may be able to switch to a lower rate.