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How to finance building your own home with a self-build mortgage
With house prices being so high and with and increasing demand for bespoke built houses, you may be considering building your own house. Not only can you then ensure that the house is exactly what you want, you can also make it energy efficient in the process and you can achieve all of this at a lower cost than if you attempt to buy what you are looking for.
How to get started getting a self-build mortgage
Unfortunately over the past few years this particular mortgage market has shrunk significantly as there was little demand for it. Therefore just finding a self-build mortgage is going to involve searching a niche market. Many of the products that are available are provided by building societies and so they can be a good initial port of call. You will find that the required deposits and other associated conditions will be heavily dependent upon whether you have already secured all of the required planning permission and whether the building work has actually started or not. Any potential lender will take into account any current rental or mortgage commitments before deciding how much they will be willing to lend you.
You are more likely to be successful in your application for a self-build mortgage if you have put together a realistic budget for all of the work that needs to be carried out whilst also ensuring that you have somewhere to live for the duration of the building work. As a rough rule of thumb you can expect to be able to borrow around 75% of the end value of the property. You should also make sure that you have detailed plans for the build of the property and a linked projection of the costs associated with each element of the build. You need to start your application early as unlike a residential mortgage, the application process for a self-build mortgage generally takes around five months. The details of your build plans will also influence exactly how much a lender will offer you.
Receiving your payments
Unlike a residential mortgage, you will receive your mortgage loan in stages. The number of stages will be agreed with your lender and one of the stipulations of the mortgage is likely to be that the lender will need to inspect each stage of the build before they will sign off to release the next payment.
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