Non Standard Mortgages - Self Build
Self Build Mortgages
Self build mortgages, also known as stage payment mortgages,
are another specialist type of mortgage that have seen a
surge in popularity over the last decade, thanks to the
rising number of people building their own home or undertaking
a major renovation, extension or conversion project.
Around 10 percent of all homes built in the UK - and 1
in 4 of all new detached houses - are self build, with around
20,000 people each year building or renovating their own
homes. This may seem like a lot, but the proportion is much
higher in Northern Ireland and in many parts of mainland
Europe, so it is fairly likely that this figure will grow
in future.
Given that the average self-build project costs around
£150,000, it is no surprise that over two-thirds of self-builders
need long term-mortgage finance to fund their operations.
The finance for this type of property is not as straightforward
as that for a standard house purchase. You'd be advised
to look into the availability and suitability of the different
mortgage products at the earliest opportunity and arrange
borrowing so that you know the money will quickly be available
when you find your ideal site.
Despite the increasing propensity of UK citizens to build
their own home, there are still probably fewer than 50 different
self-build or stage payment mortgages on the market. These
have varying features in terms of the maximum permissible
LTV, underwriting policy, and the lender's attitude towards
planning permission, building regulation approval and warranty.
But the most important variation concerns the point at which
lenders will release the funds. Some lenders won't release
any money at all until the work is well underway, while
others will advance the money to buy what is often the most
significant expense - the land itself.
