If you want to build a home for yourself or as an investment, it can be hard to compare flexible loans to find the best deal because there are so many different factors. A "self-build mortgage" is a loan for building a home. There are several different kinds of self-build mortgages on the market.
Differences between a mortgage for a self-built home and a regular mortgage
Before you can compare flexible loans for a self-build, you need to know what makes a self-build mortgage different from a regular mortgage. The main difference is that the money for a self-build mortgage is given out in stages as the building is done, instead of all at once. As with a traditional mortgage, the success of the loan application doesn't depend only on the applicant's finances, but also on how well and honestly they present their case. Mortgage lenders will want to make sure that the project is well-planned and made by professionals who are qualified to do so. They will use the plans to figure out how much your land is worth and how much your self-build project will be worth in the end. Along with making a detailed budget, you need to do a detailed cost analysis. They will also look at how interested you are, how much experience you have, how sure you are that you can finish the building in the time you have set, and why you want to do a self-build.
At the moment, there are no self-build loans that cover the full cost of the project. They can be anywhere from 50 to 80% of the value of the land, so you need some money to start. During the building process, the money can be given out in two ways: at the end of each stage, which is called a "arrears stage payment," or at the beginning of each stage, which is called a "advance stage payment." More people choose the advance stage payment mortgage because it gives them money while the house is being built.
Before you look at flexible loans, make a detailed plan of your expenses so you know exactly how much you need to borrow. Then, try to find a flexible loan with the lowest interest rate and the shortest possible payment period.
When comparing flexible loans, there are a few important things to keep in mind.
There's no easy way to compare flexible loans for a self-build mortgage because there are so many things to think about and what works for one homebuyer might not work for another. But when you compare flexible loans for your self-build mortgage, the most important things to think about are:
How much can you borrow compared to how much the house is worth?
Who will figure out how much the land and property are worth? What does it cost?
Are the payments for each stage made before or after the stage?
Will you need a detailed or a short version of your planning permission in order to get an advance loan?
Are there fees for inspections and valuation surveys that need to be done more than once before money is released?
Is the lender willing to work with you if you need to change the plans for your self-built home?
Do you need a warranty or some other kind of insurance for the building? Most lenders also require site insurance to protect against theft of materials and damage to the building while it is being built.
Are there any fees for early cancellation, completion, or return?
Can you run the construction yourself, or does the lender require you to hire an architect or project manager?
What building requirements come with the loan?
Conclusion
A self-build mortgage has a lot of different parts, and there's no quick way to compare flexible loans that fit your needs. An independent mortgage broker can help you find the right flexible loan for your needs.
