Self Build Mortgages

Self Build Mortgages

What are self build mortgages?

Anyone who has tried to find the right house in the right location will know that it can occasionally be like looking for the Holy Grail. But maybe that's because the house just hasn't been built yet. Should you wait until one developer uses his telepathic powers to build you the house that you want? Or should you just go and get it built yourself?

If you bought a plot of land, bought materials whilst paying wholesale rates, then employed labour directly, you would be buying a house at cost price. You would be paying what a house developer has to pay, but you don't need to add on your marketing and sales costs and a profit margin.

There's even a Self Build Advisory service to help you, and you can ask them whatever you want. They will understand why most self-builders are doing what they are and it's rarely because of money. The main motivation for people to build their own home is so that they can have the home of their dreams.

First, you need to buy a plot of land, hopefully one with planning permission for development already granted. This could be outlined, where the local authority has agreed that building can take place, or detailed permission, where the actual design has been agreed. Building plots are found in the local papers or even with estate agents.

Your next step will be financing the building of the home. Luckily, self-building has become common enough that over 30 banks and building societies offer mortgages to self-builders. These lenders will lend you between 25% and 80% of the land's value in addition to between 65% and 95% of the building costs. Any money for construction is paid in arrears usually, once key stages of the building work are completed.

With this product, the lender advances the money to you in five steps. This is in order to stop cash flow being a problem. As you might have guessed, you need to plan carefully the costs that you may incur in building the house. You won't get the mortgage unless you've done this anyway, but your instalments might not be sufficient if you have underestimated your costs or suddenly need to buy new materials.

If you decide to selfbuild, you should be aware of your limitations. Don't try and do anything that you are not absolutely sure you can do. There is too much money at stake. You should call in a surveyor, a planning consultant and an architect. You should also get a solicitor to draw up contracts between yourself and your builders. Should you not be about everyday to oversee the building work, you'll need to employ a project manager.

What are the dangers of a selfbuild mortgage - CLICK HERE

What are self build mortgages?

© AskFinancially.com 2008

Mortgage Advice

Insurance & Loans

Copyright

Self Build Mortgages

What are self build mortgages?

© AskFinancially.com 2008

Mortgage Advice

Insurance & Loans

Copyright