Skip to main content
  • 0114 2848808
  • info@hartleyhepworth.com
HOME
  • Home
  • About Us
  • How We Work
  • Research Links
  • Market Data
  • Enquiry Form
  • Privacy Notice
  • Contact Us
HOME
  • Home
  • About Us
  • How We Work
  • Research Links
  • Market Data
  • Enquiry Form
  • Privacy Notice
  • Contact Us
Select category
  • Financial Planning
    • Introduction to Financial Planning
  • Protection
    • Why Protection is Important
    • Life Assurance
    • Family Income Benefit
    • Income Protection
    • Private Medical Insurance
    • Critical Illness
  • Savings & Investments
    • Introduction to Savings & Investments
    • Capital Investment Bonds
    • Offshore Collectives
    • Junior ISAs
    • National Savings Products
    • Endowments
    • ISAs
    • Equities
    • Collectives
    • Unit Trusts
    • OEICs
    • Investment Trusts
    • Fixed Interest Investments
  • Business Protection
    • Introduction to Business Protection
    • Key Person
    • Share Protection
    • Directors' & Staff Benefits
    • Income Protection
    • Relevant Life Cover
    • Employers' Liability
    • Professional Indemnity
  • Mortgages
    • Introduction to Mortgages
    • Mortgage Repayment
    • First Time Buyer
    • Remortgaging
    • Standard Variable Rate Mortgages
    • Fixed Rate Mortgages
    • Tracker Mortgages
    • Cashback Mortgages
    • Offset Mortgages
    • Second Charge Mortgages
    • Buy to Let
    • Self Build Mortgages
  • Equity Release
    • Introduction to Equity Release
    • Types of Equity Release
    • Lifetime Mortgage
    • Home Reversion Plan
    • Drawdown Lifetime Mortgage
    • Home Income Plan
    • Costs
  • Pensions
    • Retirement Planning
    • National Employment Savings Trust (NEST)
    • Occupational Pensions / Auto Enrolment
    • Annuities
    • Income Drawdown / Unsecured Pension
    • Personal
    • Stakeholder
    • State Pension
    • SSAS
    • SIPP
    • Executive Pension Plan
  • Wealth Management
    • Introduction to Wealth Management
    • Relationship Management
    • Trust Information
    • Lasting Power of Attorney
    • Wills
  • Taxation
    • Introduction to Taxation
    • Income Tax
    • Capital Gains Tax
    • Inheritance Tax
  • Online Services
    • Research Links
    • Market Data
  • Calculators
    • Stamp Duty Calculator
    • Mortgage Borrow Calculator
    • Mortgage Repayment Calculator
    • Overpayment Calculator
  • Financial Planning
    • Introduction to Financial Planning
  • Protection
    • Why Protection is Important
    • Life Assurance
    • Family Income Benefit
    • Income Protection
    • Private Medical Insurance
    • Critical Illness
  • Savings & Investments
    • Introduction to Savings & Investments
    • Capital Investment Bonds
    • Offshore Collectives
    • Junior ISAs
    • National Savings Products
    • Endowments
    • ISAs
    • Equities
    • Collectives
    • Unit Trusts
    • OEICs
    • Investment Trusts
    • Fixed Interest Investments
  • Business Protection
    • Introduction to Business Protection
    • Key Person
    • Share Protection
    • Directors' & Staff Benefits
    • Income Protection
    • Relevant Life Cover
    • Employers' Liability
    • Professional Indemnity
  • Mortgages
    • Introduction to Mortgages
    • Mortgage Repayment
    • First Time Buyer
    • Remortgaging
    • Standard Variable Rate Mortgages
    • Fixed Rate Mortgages
    • Tracker Mortgages
    • Cashback Mortgages
    • Offset Mortgages
    • Second Charge Mortgages
    • Buy to Let
    • Self Build Mortgages
  • Equity Release
    • Introduction to Equity Release
    • Types of Equity Release
    • Lifetime Mortgage
    • Home Reversion Plan
    • Drawdown Lifetime Mortgage
    • Home Income Plan
    • Costs
  • Pensions
    • Retirement Planning
    • National Employment Savings Trust (NEST)
    • Occupational Pensions / Auto Enrolment
    • Annuities
    • Income Drawdown / Unsecured Pension
    • Personal
    • Stakeholder
    • State Pension
    • SSAS
    • SIPP
    • Executive Pension Plan
  • Wealth Management
    • Introduction to Wealth Management
    • Relationship Management
    • Trust Information
    • Lasting Power of Attorney
    • Wills
  • Taxation
    • Introduction to Taxation
    • Income Tax
    • Capital Gains Tax
    • Inheritance Tax
  • Online Services
    • Research Links
    • Market Data
  • Calculators
    • Stamp Duty Calculator
    • Mortgage Borrow Calculator
    • Mortgage Repayment Calculator
    • Overpayment Calculator
  • Home
  • >
  • Self Build Mortgages

Self Build Mortgages

For those who want to build their own home, a conventional residential mortgage is not an option. Instead, the self-builder would need to apply for a self-build mortgage. Not every lender is active in the self build mortgage market and those that are, tend to charge a higher rate of interest for self build mortgages. Self build mortgages involve regular site inspections, additional administrative tasks and are deemed to carry more risk for the lender than conventional mortgages do. Also, the self build mortgage application can take longer to process than average — five or six months is not unusual.

Key requirements

The lender will want to see detailed plans for the property, an accurate build cost projection, building regulations approval and would expect, at the very least, outline planning permission to have been granted. And rather than the borrower taking on the build, lenders are likely to require a professional builder or a qualified project manager to be appointed.

Deposit and lending criteria

Lenders will employ a professional valuer to assess the property’s market value on completion and during the build. If the mortgage provider considers the project viable, the amount they’re willing to advance will be determined by a range of factors such as build type, construction methods and materials used and the property’s location. The lender will also take account of the borrower’s credit history and judge whether they can afford to make the loan repayments or not.

As most lenders will not advance more than 75% of the current value of the land and a similar amount against the build costs, the self build borrower has to find a larger deposit than normal. Some providers require the mortgagor to have bought the land prior to applying for the mortgage.

Stage-by-stage funding

Houses are built in stages, which is why self build mortgage funds are released in stages. Precisely when each advance is made — either at the beginning or on completion of each stage — depends on the lender’s policy. Where applicable, the first advance is used to help buy the land on which the property will be built. Subsequent advances are made (subject to the valuer’s approval) once the foundations have been laid, at the point when construction reaches the level of the eaves, as soon as the property is watertight and when the interior walls have been plastered. The final advance materialises when the property is ready for occupation. 

As a mortgage is secured against your home, it could be repossessed if you do not keep up the repayments.

Self Build Mortgages

For those who want to build their own home, a conventional residential mortgage is not an option. Instead, the self-builder would need to apply for a self-build mortgage. Not every lender is active in the self build mortgage market and those that are, tend to charge a higher rate of interest for self build mortgages. Self build mortgages involve regular site inspections, additional administrative tasks and are deemed to carry more risk for the lender than conventional mortgages do. Also, the self build mortgage application can take longer to process than average — five or six months is not unusual.

Key requirements

The lender will want to see detailed plans for the property, an accurate build cost projection, building regulations approval and would expect, at the very least, outline planning permission to have been granted. And rather than the borrower taking on the build, lenders are likely to require a professional builder or a qualified project manager to be appointed.

Deposit and lending criteria

Lenders will employ a professional valuer to assess the property’s market value on completion and during the build. If the mortgage provider considers the project viable, the amount they’re willing to advance will be determined by a range of factors such as build type, construction methods and materials used and the property’s location. The lender will also take account of the borrower’s credit history and judge whether they can afford to make the loan repayments or not.

As most lenders will not advance more than 75% of the current value of the land and a similar amount against the build costs, the self build borrower has to find a larger deposit than normal. Some providers require the mortgagor to have bought the land prior to applying for the mortgage.

Stage-by-stage funding

Houses are built in stages, which is why self build mortgage funds are released in stages. Precisely when each advance is made — either at the beginning or on completion of each stage — depends on the lender’s policy. Where applicable, the first advance is used to help buy the land on which the property will be built. Subsequent advances are made (subject to the valuer’s approval) once the foundations have been laid, at the point when construction reaches the level of the eaves, as soon as the property is watertight and when the interior walls have been plastered. The final advance materialises when the property is ready for occupation. 

As a mortgage is secured against your home, it could be repossessed if you do not keep up the repayments.

Read less

Company address: Hartley Hepworth Financial Planning Ltd, Howbrook Farm, Howbrook Lane, Sheffield, South Yorkshire, S35 7EH T: 0114 2848808 E: info@hartleyhepworth.com

Hartley Hepworth Financial Planning Ltd is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited which are authorised and regulated by the Financial Conduct Authority.

Hartley Hepworth Financial Planning Ltd is registered in England and Wales, Company No: 04675658. Registered Address: Howbrook Farm Howbrook Lane, Howbrook Wortley, Sheffield, South Yorkshire, S35 7EH

The guidance and/or information contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

Approver Quilter Financial Services Limited and Quilter Mortgage Planning Limited.

© Copyright 2023 Adviser Pro. All Rights Reserved

Design and Development by Adviser Pro