Self Build Mortgages – what are the options?

The concept of self-build is attractive to many and the theory that finance is not out there for this type of project is simply not the case. While the press certainly paint a bleak picture, there are some great options from a variety of lenders. Dependent on where you are in your planning, and how much money you have to buy land or start the project, there are lenders out there. This blog offers brief insight into some of the options.

If you have the land already, or have the cash to buy the land there are more lenders to approach, this is a brief synopsis of the options, correct at time of publication, but subject to change:

Buildloan

Build Loan are a packager. So a mortgage broker can access a panel of lenders via Build Loan.They specialise in the self build market and have exclusive deals available with a variety of lenders. They also offer a state of the art facility based in Swindon which is certainly worth a visit. They are able to offer finance even for the land purchase provided the land has at least outline planning permission. depending on the product and lender chosen, the remaining funds are paid at various stages of development.

BM Solutions

Bm Solutions is part of the HBOS group, which includes lenders such as Halifax. Under the BM Solutions brand they offer up to 75% loan to value in 5 stages, which includes land purchase. They do hold 10% of the full loan back until the nominated architect or qualified contractor signs off a completion certificate. At each stage of the build, before the next installment of funds is drawn down, their surveyor must re-inspect. This is at the cost of the borrower. Traditionally, BM Solutions will not lend after build has started, normally requiring a flat building site ready to start; however, this may be reconsidered providing the build has gone no further than foundation level.

Furness Building Society

For self build they only lend in their operative postcode areas. There are 8 stages which may suit some build models, however, lending is restricted to 66% loan to value on each stage. Re-inspection prior to each drawn down is also required.

Halifax

Under the Halifax brand, HBOS offer a different solution to the above criteria for BM Solutions. A key advantage is that Halifax will offer a self build mortgage on any of the standard products, rather than only on their Standard Variable or a specific Build-Mortgage rate which is the case with other lenders. The restrictive part of their criteria is that work must of started. The land has to be purchased, with building to of been completed to at least the first level before lending can kick in. Again, re-inspection is required before each draw down of funds. The maximum loan to value is 80% and there is a specific formula used to work out how much money will be available at each stage.

Hinckley and Rugby Building Society

They will not lend on the land, so that has to be purchased first. 75% of the total loan is available in 4 stages. re-inspection at each stage is required and lending during the build is only available at the lenders Standard Variable Rate, however, once complete they will agree to swop to a ‘deal’ rate at an agreed loan to value based on the value of the project once complete.

Leeds Building Society

60% of the land value is available with outline planning permission, or 75% with detailed planning permission. These figures are based on the value of the land and not the finished project. There are 5 stages and re-inspection is required prior to each draw down of funds. Leeds have a specific mortgage product available for Self Build.

Melton Mobray Building Society

Again 5 stages and a maximum of 75% loan to value. The key difference with this Building Society to all of the above is that they will accept semi-detached self build projects. All other lenders want detached only. This means that if you are building two properties, or have purchase land with a view to building onto the side of an existing building, this lender offers something the others do not – they’ll lend on it!

Self Build can be complex

This does not cover every lender in the market nor contain all of the terms and conditions of each lender. It does provide a taste of what is available. Self Build mortgages can be a complex thing. It is important to get the right advice right from the start and calculate the exit route to the self-build mortgage as well as the funding and build cost of the project. At Harvey Bowes, we have experience in this field and would be happy to discuss your requirements. Contact us today on 029 2115 6918.

Self Build is a great alternative to buying a new build development from a major developer, it is however, important to be able to get professional help if you do not have the right experience. Many of these lenders require a professional builder with the correct qualifications or an Architect to oversee the build and sign it off on completion. If you look to sell the property within 10 years you will almost certainly need some sort of guarantee to be available or an Architects Certificate so that the buyer can get a mortgage for the property. For a more in-depth view, please contact Harvey Bowes, mortgage broker Cardiff on 029 2115 6918

Think carefully before securing other debts against your home. Your home may be
repossessed if you do not keep up repayments on your mortgage

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About harveybowes
Mortgage Broker and founding Director of Harvey Bowes Limited. A mortgage broking practice with bases in Cardiff & Poole, UK. We take a fresh and positive approach to mortgage broking which pays dividends for both our clients and frankly, ourselves. The team at Harvey Bowes are expert advisors in all aspects of mortgages from residential to commercial and buy to let.

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