Whether you’re an industry expert or an aspiring home builder, these helpful tips can walk you through the key factors of self-build mortgages and how you can obtain yours the easy way.

Self-build mortgages act as financial support for people who wish to build their own home. In comparison to traditional mortgages, these funds are supplied at key stages of the build, as opposed to being released in one larger sum at the point of the final sale.

Before you settle on your self-build mortgage, it’s important that you know the types which are available to you, along with any interest rates and the total amount that is possible to borrow.

After analysing your current financial status and considering the cost of the plot and the contingency fund, you can determine how much you would be able to borrow to build your home. Following this, you can choose the type of self-build mortgage that accurately suits the needs of your new home prospect.

  • Arrears Type

With the arrears type, the stage payments are provided as each stage of the build is approached. This is the best option for a builder who has access to a large cash stream of their own which they will dedicate towards the project.

  • Advanced Type

With this advanced type, the stage payments are supplied as each stage of the build begins. This means that the money would be available when labour and material bills are due, which is a more cost-effective way of managing your loan.

The interest rate on a self-build mortgage currently stands higher than the standard house purchase rates, varying from 4-6.5% each year, however this can change depending on your lender. When choosing your finance option, remember that in most cases, bridging loans can usually seem like the most expensive option. This is because they are standing between 0.59% – 1.5% per month, while the current arrangement fees within the market are also relatively high.

After the property is deemed as habitable, most lenders will allow the borrower to change their agreement to one with a lower interest rate throughout the “tie-in period” without any additional penalty fees.

To eliminate any potential set backs in the finances for your build, we advise that you thoroughly consider these costs before you begin with the process.

  • Land purchase fees
  • Cost of construction
  • Design fees
  • Project management,
  • Health and safety cautions
  • Site preparation
  • Obtaining planning consent
  • Any potential associated fees linked to the above

Lenders are known to greatly vary their fees and rates depending on a number of factors. At Compariqo Finance, we inform you of all fees and associated costs from the outset so there are no nasty surprises along the way.

We pride ourselves on offering a bespoke service, as each individual’s circumstances are different. That’s why we don’t offer a “one size fits all” solution. Our panel of over 50 lenders means that we cater for even the most complex situations.

Start your search today, with Compariqo Finance.