Self Build Mortgages

Being a self-builder means designing and building your own home.

You may have an idea of what your ideal home would look like. But to turn that dream into a reality, you need a suitable plot of land and an architect.

The architect will provide you with an initial sketch and if you decide to go ahead, they will provide detailed plans. You then show these to builders, who will give an estimate of how much the construction work will cost, and how long it will take.

You will also need to get planning permission from the local authority.

Don't underestimate the cost: As well as fees to solicitors, you've got to pay an architect, builders, plumbers and many others.

You might also want to take insurance against long delays or overspending. Always have a contingency fund of around 10% of the total cost.

You'll also pay stamp duty on the land purchase if it costs more than £125,000, but not on the property.

Finding land

Building plots are hard to find. Good sites sell quickly because developers are always on the lookout for opportunities.

Take into account your new home's dimensions, car parking space, space for a garden, the area you want to live in, children's schooling and any other local amenities that are important to you.

Once you have found a plot of land, you will need to find out whether it has planning permission.

Where to live during your self-build

Up to 75% of self-builders have to sell their current property in order to finance their new home.

For many, this means renting a flat or house or buying or hiring a mobile home to live in during the construction process.

Other costs you must budget for include the storage of your furniture - and remember to make sure your personal possessions are covered by insurance whilst they are in storage.

Self-build mortgages

With a self-build mortgage, the money is released in instalments as the development progresses - with an initial payment to cover the land purchase.

You're unlikely to get a loan for more than 75% of the land costs, or 60% of build costs.

Even at these rates, these tend to be higher-risk niche mortgages: As a result, you'll pay a higher interest rate if you manage to get a loan.

It will be particularly difficult to convince a lender to lend you money if you plan to do the building yourself.