First of all build up your money

There is so much help and advice out there, so when you build your dream home don’t think raising cash is a nightmare

Getting the right help is invaluable when financing your self-build.

You need an independent financial advisor and there are plenty who specialise in this market. What an architect is going to do with your ideas, your financial advisor is going to do with your money. Each of them takes your ideas and aspirations and turns them into workable plans – one for the building and one for the money to build it.

Not all lenders deal in self-build mortgages and you will benefit from having someone who knows how to hunt down those who do and those offering the best deals for your circumstances and ambitions.

The good news about building your own home is that you almost certainly get more house for your money. The bad news is you need more money for the house to begin. Buy an existing property and the mortgage arrives in a lump sum. Build and the money will come in stages as work on the property progresses.

A house buyer’s deposit is far smaller when compared with the initial lump sum a self-builder needs to buy the land and get the first stage completed on site before the mortgage kicks in and cash arrives to fund the next stage. That is why so many people sell their homes and live on-site in a static caravan; their old home is helping build their new one. The self-build home buyer is always ‘in arrears’ though some ‘advance’ mortgages can be found where the cash arrives at the start of each stage of construction.

The self-build mortgage traditionally has six stages

• Land purchase

• Preliminary costs and foundations

• Wall plate level (brick and block) timber frame kit erected

• Wind and watertight

• First fix and plastering

• Second fix and completion

Some building societies might loan up to 80 per cent of the total cost of the land and construction costs or valuation, whichever is the lower, making the build process more flexible.

Get the VAT back

Remember to keep on top of your paper work and claim back VAT where eligible. The government has funds and grants for self-building and renovating some properties but make sure it is the government giving you the cash and not the other way round.

There are circumstances where you qualify for zero-rated VAT and a reduced VAT rate at source if any VAT registered business should supply labour or labour and materials. Once the project is completed, you can reclaim any VAT paid on qualifying materials bought at 20 per cent VAT along with any five per cent VAT invoices. The rules and regulations can be daunting and there are specialists you can hire to help you. Applying for a reduced rate VAT certificate helps.

There are plenty of experts out there who will help you.

Government help can secure your dream

The Self Build Loan Fund (SBLF) is a Scottish Government initiative, which will run until August 2021, to assist self-builders where they have been unable to obtain mainstream self-build mortgages

The Self Build Loan Fund operates across Scotland in rural and urban areas. Those eligible can borrow up to £175,000, which they can draw down in staged payments similar to a traditional selfbuild mortgage. Borrowers must provide

a Professional Advisors Certificate at each stage of drawdown.

It funds the construction phase of a new home and, once this is completed, the borrower will repay the loan either via a mainstream mortgage or by using the equity from the sale of their existing home.

The Scottish Government has appointed the Highlands Small Communities Housing Trust (HSCHT) to administer the SBLF on

its behalf - after the trust ran a successful pilot scheme in the Highlands.

The fund cannot be used to buy house plots, as the plot must be in the ownership of the applicant to provide the Scottish Government with security for the loan. When you apply, you must demonstrate you have been unable to obtain mainstream selfbuild mortgage finance.

You also need to show that: • This will be occupied as your sole and only residence • You own the house plot

• Have full planning permission

• Are ready to apply for a building warrant

• Have a defined build cost and construction programme

• Can demonstrate that you will be able to

repay the loan upon completion Conversions and extensions of properties cannot be financed by this grant.