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?
- 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.
- 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.
- 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.
- 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.