October 2015 - First 4 Commercial

Self-Build Mortgages, What To Look For?

Finding your perfect home is not always that easy, so building your own dream home and forging exactly what works for you is a way of living that many people are now veering towards. Financing a self-build isn’t necessarily that easy however and it requires a different type of mortgage compared to the conventional high street offering.

Whether you are opting for the self-build, do it yourself route or buying in the professional services of an architect, electrician, plumber and builder, the process needs to be thought through with precision accuracy. Whichever route you decide on, a standard residential mortgage will not apply.

So what are self-build mortgages and what do you need to look for?

  1. The main difference between a self-build and standard mortgage is that the funds are released at varying intervals throughout the build rather than in one lump sum. The main reason for this is that it reduces the risk to the lender and ensures that the money is spent according to plan rather than running out half way through a project.
  2. It will depend on the lender as to when the funds are released, however it basically works out that the first portion of money is given when the land is purchased, the second when the foundations are laid and the next payment is issued when the property is built to eaves level. The next payment is generally released once the roof is watertight and the interior walls finished and the last instalment is issued once the property has been completed.
  3. Some lenders will release more of the money up front, this is particularly useful if you need to purchase all of the materials and pay for the labour requirements before the build commences.
  4. The interest rates on self-build mortgages do tend to be higher than the standard residential mortgage so finding the right broker is essential for you to get exactly the service that you need.

A Quick Guide To A Buy To Let Mortgage.

1. What is a buy-to-let mortgage?
A buy to let mortgage has been designed for someone who is purchasing a property to rent out to someone else. The person buying that property will not be living there.
2. Is it hard to get a buy to let mortgage?
Many lenders require a 25% deposit of the value of the property, so they are harder to get than in recent years although there are plenty of mortgages available for this purpose.
3. What rent will you need to charge to?
You will need to determine how much rent you will be charging for the property and if this is enough to cover the mortgage on it. You must make sure that your expected rent is realistic and fits within the area you are buying before applying for a loan.
4. How much will I be charged?
Interest rates are higher on a buy to let mortgage than a standard mortgage. As well as arrangement and booking fees. So check these all out with your provider or broker before you begin the process of application.
5. Do I need a specialist broker?
Although there are several high street lenders that offer buy to let mortgages, a specialist broker will be able to offer specific advice and will have access to a greater variety of lenders. This could mean that you will get a better deal and one more suited to you by going down this route of extra expert help.

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