Self Build Mortgages
If you are thinking of building your own home to your own specifications, Prime Financial Solutions & Mortgages Ltd can help provide guidance on the requirements for a self-build mortgage and will assist you in getting the finance you need to build your dream home.
What is a Self Build Mortgage?
A self-build mortgage is specifically designed to help you to build your own home. A mortgage loan for people who build their own homes is different from the standard residential mortgage. Instead of receiving a single lump sum, the financing / funding is received in stages as each part of the house construction is finished. The reason for this is to reduce the risk for the lender and there is more certainty that the money gets spent as planned. Nobody wants to run out of money before the house is built.
The funds are usually issued at certain points of the house build. When you purchase the house, when the foundations are laid and when the property is built up. Then later when the roof is watertight, and then when the inner walls are plastered, and so on.
The proposal you submit normally includes estimates and a description of the probable construction costs. Cost of your plot and a healthy contingency fund for any problems you may experience should also be included.
There are Different Types of Self Build Mortgages
- Arrears: This type of mortgage for self builders is more common. Payments are issued after completion of each stage of the build. This sort of mortgage is better for people who have more cash to help pay for the project contingency.
- Advance: Payments are made at the start of each point of the project. This means money is available to spend when bills for work and materials are requested. An advantage is there is no requirement for bridging loans and limits the possibility of acquiring extra short-term debt. This type of self build mortgage is best for people who don’t have enough of their own money to fund their own project and it helps to have additional cashflow for the project.
Arrears Mortgages are offered more often than Advance Mortgages. Self-build mortgages interest rates are in general, higher than with standard mortgages.
Self Build – Saving Money on Stamp Duty
Thousands of £ pounds can be saved in stamp duty when you take on a self build mortgage. Stamp duty is not levied on the cost of construction work, or on the value of the property when the work to complete the build has finished. Bear in mind, that if the cost exceeds £125,000, you will pay duty on the value of the land. You will often find that the value of the finished property is considerably higher than the cost of the assembled land + materials + labour.
When you decide that you want a self-build mortgage, there is much paperwork involved and detailed plans for the property are created and supplied. A lender can ask for any additional supporting documentation from the following:
- Planning permission approval proof.
- Building drawings and specifications.
- Your approval of Building Regulations.
- Site insurance and a structural guarantee certificate.
- Architect occupational allowance details.
- Cost projections
The deposit usually required is at least 25% to a maximum of 50% of the total value of the project. It might be obvious to some but it’s important to remember that you will need alternative accommodation while your new property is being built, which will mean added costs.
Self Build Mortgages – Just One of Our Many Specialised Services
Self build mortgage applications can take up a lot of time and expense. Prime Financial Solutions and Mortgages Ltd is an established mortgage broker and life insurance broker. We are based in the centre of Wigan, Greater Manchester UK and we are respected and recognised by the FCA. Find out how we can help you to find the best possible solutions in the shortest amount of time. Contact Prime today to book a free consultation.
To find out more you can contact us by email email@example.com and by phone 01942 665436 or you can use our quick contact form. You can visit us at Rodney House, King Street, Wigan WN1 1BT. If you would like to complete a quick online application for Life Insurance you can go straight here to get your free quote.