Helping you towards your Self-Build mortgage
The vast majority of people thinking about their first or next new property will be looking at buying a newly built or existing house, flat or maisonette – whichever fits into their idea of their dream home. For a significant minority however, the path to their ideal place to live lies not in what has already been constructed, but in what they can create for themselves – a house designed to their own specifications and built to exacting standards by contractors they have been able to vet themselves.
People choosing to build their own homes can have rooms of exactly the right size and number they require, open-plan or sectioned spaces to their liking and every surface, fitting and fixture down to the finest detail supplied according to their tastes.
However, you plan to proceed with the design and construction of your custom-built dream home, in order to fund the land purchase and construction work you will need to arrange a special type of loan or self-build mortgage. The experienced team at The Mortgage Centres can help you to find exactly the right lender and mortgage deal to meet your needs.
Advantages of Self-Build mortgages
The biggest advantage is of course being able to oversee the construction of a property that is designed and built to your exact design and specifications. A self-build home can be an incredibly satisfying project
The cost of building your dream home could also work out to be cheaper than if you had bought the equivalent new build property in the same area. After all, the property developers who construct new homes have to make a profit, and in this case, you won’t have to fund that mark-up.
Another advantage could be in the amount of Stamp Duty Land Tax that you pay – if indeed you need to pay any at all.
Disadvantages of Self-Build mortgages
Self-build mortgages can tend to be more expensive than conventional residential mortgages, and often carry higher interest rates and peripheral fees. Lenders also ask for a substantial deposit, usually a minimum of 25% but often as much as 50%, depending on your particular circumstances. You may need to find a lot more cash upfront to fund the land purchase and advance building costs.
Lenders of self-build mortgages will also ask to see a lot of detailed documentation around the construction project. You may need to supply planning permission documents, floorplans and a complete projection of the anticipated costs.
Also, you need to bear in mind that you will need to cover your own accommodation on top of your construction costs while the build is taking place, unless you already have access to private accommodation through personal means. You may have to cover your existing mortgage or rent on your current home, or rent another property for a potentially long period of time depending on the complexity of the project.