Having decided to build your own home how do you go about funding it?
Paying for self-build projects is different from buying a ready made property as you fund the building work over a period of weeks or months and so there isn’t one big purchase to complete. Savings can help offset costs such as renting accommodation during the building process. You may also need a deposit of a larger percentage than for other kinds of mortgages.
Self-build is a relatively small market at the moment and there aren’t a wide range of standard mortgages too choose from. In order to get a mortgage you’d need to speak to several lenders to work out the best options for you and they will need to check the plans in detail before deciding whether to lend to you.
Funds from self-build mortgages are usually released in stages so that there is money available during the building process. The lender will carry out regular inspections to make sure that everything is going as planned before each instalment is signed off.
Self-build mortgages tend to be more costly compared to a standard mortgage for the same amount because there is extra involvement and administration for the lender though, of course, you may need to borrow less. People who self-build may be able to switch to a different kind of mortgage once all the work is complete.
Many people self-build because they want to make a home to stay on but, for those who do choose to sell and move on, the resale price could be higher than what it cost to build. This is money This is money (This link will open in a new window) estimates that the selling price on an open market could be as much as 20 – 25% more than the building costs. This depends on location, quality of the build and the state of the property market in general.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE