Tag Northern Ireland

Tag Northern Ireland

The first 5 questions we’re asked on Self Build Mortgages

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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%.

The self-build mortgage lender will usually hold back around 10% of the mortgage amount until you get your completion certificate.

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

Who are the Self-build Mortgage Lenders in Northern Ireland?

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The self-build mortgage are a niche market in general but add that to the usual restrictions that come along with the Northern Ireland market and you don’t have many lenders to choose from.

Who will provide a mortgage for a self-build in NI?

Well in alphabetical order the lenders offering self-build mortgages across the province are*:

  • Bank of Ireland
  • Danske Bank (formerly Northern Bank)
  • Ecology Building Society
  • First Trust Bank
  • Halifax
  • Progressive Building Society
  • Ulster Bank

* List up to date as of 28/04/2013

So why do you need a mortgage adviser when you could look up 7 websites in 15 mins and know the best deal?

That’s simple, a good mortgage adviser will know the lenders that are willing to lend. They will match you and your self build project to the most suitable lender. Every lender has individual requirements that they want their borrowers to meet for a standard mortgage but this is even more prevalent for self-build mortgages.  For instance some lenders will release money on the land whereas others will expect you to reach wind and watertight before releasing a penny.

A good mortgage adviser will also save you time and frustration when it comes to the drawn out mortgage application process.  A typical self-build mortgage application can take up to 4-10 weeks in the current market and a mortgage advisor can take most of the burden off your hands.

If you know of any other lenders in the NI Self-Build Mortgage market why not leave a comment and we’ll update the list accordingly.

Images courtesy of Atsushi Tadokoro on Flickr

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE