If you can’t find your dream home why not build it yourself? A Self Build Mortgage will release the money in stages as the build progresses, usually 5 stages.
The initial advance must not be more than 75% of the value of the land or purchase price, whichever is the lower. The remaining balance will be released over 4 more stages. Most Self Build projects that fail are due to the self-builder under-estimating the amount of lending needed to complete the project. It is of utmost importance that you receive the right advice before you commence a project. Our specialist mortgage advisers will be happy to discuss all your options with you.
Many of us dream of building our own home so that it is exactly the way we want it, but before you get carried away with your dreams the first thing you need to work out is how to finance the build. You won’t be able to get a standard residential mortgage, so you’ll need to apply for a self-build mortgage unless you’re fortunate enough to have the cash sitting in the bank. As the name suggests, a self-build mortgage is a home loan taken out on a property which you are building yourself.
The biggest difference between self-build mortgages and standard residential mortgages is that the funds are given to you in stages rather than as a single lump sum. This is to reduce the lender’s risk, ensuring that the money is spent as planned, so that you don’t run out of money when you’re only half way through the project.
SO WHAT’S AVAILABLE?
In most cases, the money for each stage of the build is usually only paid out once it has been completed and a valuer has visited the site. In saying this, some self-build mortgages release the money required for each stage of the build at the beginning rather than at the end. This can be useful if you don’t have the cash up front to pay your builders or to buy materials.
Please be aware that rates on self-build mortgages tend to be higher than on standard mortgages, so it pays to take sound financial advice from a specialist self build mortgage adviser.
WHAT’S THE ADVANTAGES?
One of the advantages of building your own home using a self-build mortgage is that you could save yourself thousands of pounds in stamp duty. This is because there is no stamp duty on the cost of the building work, or the value of the property once the work has been completed. You only have to pay duty on the cost of the plot of land itself if the cost exceeds £125,000.
The potential financial gains from building your own home are another advantage. Often self-builders find their finished property is worth much more than it cost them to construct / money borrowed through the self build mortgage in the first place.
For more details on a Self Build Mortgage, or for more information / enquiries on Mortgage Advice, please contact Prestige Financial Solutions