5 questions we’re asked on Self Build Mortgages
There are many questions our clients ask on self-build mortgages but here are the 5 most popular:
1. What are Self Build Mortgages?
Self-Build mortgages are exactly what they sound like, mortgages designed for those people who intend to build their own house. Despite the name Self-Build they are also suitable for people who are having a house built for them and are required to pay their builder in stages.
2. How do Self Build Mortgages work?
A self-build project usually kicks off in one of two ways, with the purchase of a plot or raising finance on an already owned plot of land with at least outline planning permission.
Funds are released in 5-7 stage payments at specified build stages, usually in arrears i.e. you must complete the work to get to each stage before they will release the funds. Each stage release is subject a revaluation and there is usually a set max loan-to-value at around 75%.
3. How much can I borrow on a Self Build Mortgage?
As with any mortgage application this depends on your own personal circumstances, some of the factors that will come into play are:
- Whether you are applying on your own or with a partner
- Any outstanding monetary commitments
- Any existing mortgages including Buy-to-let
- Where you are planning to live while you build your new home
Affordability is rarely as simple as a multiple of your income anymore but a good rule of thumb for the maximum borrowing for an ideal applicant is 4 x joint income.
4. When should I apply for a Self Build Mortgage?
In a Self Build project it can be hard to decide which part of the process is the cart and which is the horse but in this case it is essential to find out your budget. You need to know right from the start how much you can borrow so that you ensure that your home can be built on the available budget.
5. How long do I have to complete my self build?
With most lenders you have up to 18 months to 2 years to complete your build.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE