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A Guide to Self-Build Mortgages: Consulting with ADD Property Finance

Embarking on a self-build project is an exciting venture, and with the right financial guidance, it becomes a tangible reality. At ADD Property Finance, we specialise in empowering individuals to construct their dream homes. In this guide, we’ll explore the intricacies of self-build mortgages, offering insights into the process and the types of solutions available.

Understanding Self Build Mortgages

Diverging from traditional mortgage structures, self-build mortgages release funds at various project stages. This unique approach facilitates the necessary cash flow for construction, material procurement and contractor payments. We can help you tailor a self-build mortgage solution to make this feasible for individuals who may not wish to finance the entire project from personal savings.

Key Considerations before Applying

Before diving into a self-build mortgage application, meticulous planning is crucial. We recommend providing detailed plans, a comprehensive build cost breakdown (including plot cost) and, where possible, accurate projections of any future build costs. Additionally, consider incorporating a contingency fund for unforeseen challenges. It’s essential to note that interest rates for self-build mortgages may be higher than standard mortgages, and arrangement fees vary among lenders.

Stages of Fund Release

Understanding the timeline for fund release is paramount in self-build projects. ADD Property Finance can help ensure a smooth process with funds typically released at key stages, including land acquisition, substructure, wind and watertight roof completion and certified project completion. We offer flexibility for custom build or group self-build projects and renovation or conversion projects, adapting to diverse client needs.

Types of Self Build Mortgages

There are two main types of self-build mortgages: arrears mortgages and advance mortgages. Arrears mortgages suit those with substantial upfront cash, releasing payments after each build stage. On the other hand, advance mortgages are advantageous for individuals reliant on mortgage funds for each stage, aiding cash flow. We can recommend a range of lending options, ensuring our clients find the most suitable fit for their financial preferences.

Determining Borrowing Limits

The amount borrowers can secure depends on unique financial circumstances, including income, outgoings and outstanding debts. We will look to find lenders willing to lend up to 75% of project costs or more for those who already own the land. Standard affordability calculations, regulated by the Financial Conduct Authority, are applied.

Eligibility Criteria

Securing a self-build mortgage involves adhering to specific eligibility criteria. We emphasise the importance of understanding lenders’ criteria, considering living arrangements during the build and addressing any upfront rental payments. Compliance with Building Regulations, construction methods and design details is essential. Our tailored approach allows for a personalised assessment, especially beneficial for complex self-build projects.

Government’s Help to Build Scheme

While the Help to Build scheme assists with project financing, it should be clarified that the scheme itself doesn’t offer self-build mortgages. We can help guide clients on integrating equity loans from the government, emphasising the need for a registered provider to access these benefits.

Embarking on a self-build journey requires sound financial guidance, and at ADD Property Finance, we are dedicated to making this process seamless. This guide provides a roadmap for navigating self-build mortgages, allowing individuals to construct their dream homes with confidence and financial clarity. Get in touch.

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Whether you’re a first-time buyer, moving home, looking to remortgage or raise a second charge, dive into buy-to-let ventures, or looking to explore development opportunities, we have tailored solutions that cater to your unique needs.

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