Self-Build and New build Mortgages
Self-build is where the borrower buys land and builds the house themselves or hires a builder to do it for them. New build is where a new house is supplied by a builder in kit form which is then erected on site. Typically the costs can be funded either by:
• buying the land themselves, contributing at least a proportion of the building costs and getting a mortgage for the rest. The mortgage loan is usually released in stages as the work progresses; or
• financing the cost of the land, building and architect fees fully through a mortgage. Lenders are usually prepared to lend up to 95% of all costs, releasing funds in three or four stages, depending on their policy. This means there is no need to seek bridging finance to meet intermediate bills submitted by contractors.
In the case of self-build projects, the lender will insist that the builder is a member of NHBC or a similar body. If not, a minimum requirement is that the construction of the property is supervised by a qualified architect. In all cases, the lender will require a final inspection by a suitably qualified person to ensure that the work is complete.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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