Self Build Mortgage

Josh2001

Hi there.

In the near future (Approx 1 year time) I shall begin the process of designing and planning a new build home.
However I have a few questions, I already understand that for a self build mortgage lenders typically require around 20-25% deposit of the final total mortgage value.

I already own the land I will be building on (Owned outright, No mortgage or loan), and the land currently has a value of approx £60,000.

The house I intend to build will be approx £140,000.
As I already own the land outright, would the value of the land count towards the deposit for the self build mortgage as surely by already owning the land it removes some of the risk that the lender will be taking on?

Many Thanks

CasperConrad

Hi there,


I'm in a similar situation to yourself. Looking to self build with land as a potential asset. I wondered if there is anyone who can shed some light on this situation or if you yourself have progressed from this point last year?


Many thanks

amnblog

Self Build is a very tricky area and realistically needs to be done via a Broker.

Having said that it wont be easy to find a Broker than has even done more than one.

One of my least favourite types of cases as the paperwork is extensive.

Yes, the land you own is part of the security.

The funds you raise are drawn down in stages as the build progresses with the maximum lending based on the completed value.

The borrower will then typically remortgage to a permanent funding solution as self builds are priced at 5.00 to 5.50%

Expect to present to the lender with detailed planning permission and a schedule of works with costings.

It is smart not the put a spade in the ground until you have the funding organised. You will not help yourself by getting started, then chasing lending.

ACG

I think amn has covered it off.

All I would add is get a broker. A good experienced (in self build) broker. I have done one and it was the most horrendous application I have ever done. I would never do another.

timea

Hi,

I am in the same situation I got a land which I bought for £125K as a cash buyer and I received the planning permission for a 2 bed dwelling but it seems very hard to find someone to help me raise a loan to start the building . Also me and my husband own our building construction company and we wanted to go for a loan with Halifax but they won't accept for our company to be the main contractor.
We even said that we can start the works with our own money up to firs floor and we would like to get a loan from that stage . We both have a good income, have another house on which we can put a second mortgage ...but still is hard ...I don't get this ...I only need £140K and the value of the house will be £350K ..how are this things working ?

[Deleted User]

Completely agree with what brokers have already said.
I've done 3 self build mortgages now. the first one was when I was employed by a company charging a basic fee for all cases. that case was the main reason I quit and moved company to one that let me set my own fees level for different cases.

The cases tend to be lower value as well, unlikely to get a 500k self build any time soon. So it's a lot of work for very little money.

I only do them for existing clients now.


There are a lot of lenders doing them though. Majority are off the high street (only 1 I think on high street).
You can take an immediate mortgage of 75% of your land if you need money to get going, you then get further funds released at pre arranged stages.

There are a lot of good guides at buildloan.co.uk