Raising finance

Loan opportunities for self-builders in the Highland Council region

While you probably won’t want to make a formal mortgage application before you have identified a plot of land and estimated your build costs, it is important to get financial advice at an early stage to be confident that you will be able to get a big enough mortgage. Even if you don’t need a mortgage to help you buy your plot, you should try to be sure that you get a mortgage offer before you commit to buying a plot to avoid any nasty surprises later on. elf-build ortgage You will need a specific type of mortgage for self-build because a self-build mortgage is normally paid in instalments at certain stages during the building process and the lender needs to check progress at these stages to make sure it is satisfied that the work has been carried out before the next instalment of the mortgage is paid out. Only some lenders offer self-build mortgages so it may be easiest to find a suitable mortgage by using an independent financial adviser (IFA) or mortgage broker, who will be able to find out what available products may be suitable for you. est egg Whatever mortgage you choose, you will be required to provide a significant deposit to fund your build. In some cases at the moment, lenders will not provide any mortgage funding until your build reaches ‘wind and watertight’ stage – ie, the main structure of the building is complete and weatherproofed (this is in order to reduce the risk to the lender in case the project is abandoned when the home is only part built). Lenders also generally pay for each stage of the build in arrears – ie, once it is complete. If you don’t have enough savings or other ways of borrowing the money to finance the purchase of the land and the initial stages of the build, it may be possible to get mortgage finance at an earlier stage. This can either be through a specialised mortgage product which pays instalments in advance or in some cases you may be able to agree a form of bridging loan with your current lender to fund the construction phase, which allows you to take a standard mortgage when your home is complete. (Contains public sector information licensed under the Open Government Licence v3.0.) unding for roft o es The Scottish Government funded Croft House Grant (CHG) provides grants of up to £38000 for the building of a new house or the improvement or rebuilding of an existing croft house. This support is available due to the particular nature of crofting as a form of land tenure, the remoteness of the landscape and the challenges faced by crofters in accessing conventional forms of housing finance. In April 2016 a new scheme was launched which included increased grant rates, eligibility for owner occupier crofters and increased access for crofters who previously decrofted their house site. In addition, a selection mechanism was introduced to allow a prioritisation for applicants on lower incomes, lower property assets and those who intend to maximise the use of their crofts. The scheme has attracted a high level of interest since it was launched which has led to Scottish Government allocating an additional £600000, raising the total budget to £2 million for 2017/18. Full details of the scheme, basic eligibility criteria and the selection mechanism can be found by visiting https://www.ruralpayments.org/publicsite/futures/topics/ all-schemes/croft-house-grant-/ or calling RPID Tiree on 01879 220240.

The Highlands Small Communities Housing Trust presents the Highland Selfbuild Loan Fund, a new Scottish Government fund. This fund applies to plots of land within the Highland Council area only. The fund allows HSCHT, acting as agent to the Scottish Government, to provide a revolving fund to self-builders throughout the Highlands. The fund aims to generate growth in this self-build sector again, and provide financial assistance to individuals and families who have in recent years been unable to progress with their self-build projects. HSCHT will keep a database of all the people expressing interest in the fund, in hope that this will prove to lenders that there is a high demand, and that it is indeed possible to finance these type of projects. £4 million is available in total to provide to individuals and families throughout the Highlands, with applications open until the end of March 2018. This is a revolving fund, so as some projects are completed and the loan provided to them is paid back, HSCHT will then be able to use this finance to assist another applicant. The analysis of the pilot will be used to inform future policy for self-build support in Scotland, and to provide evidence of demand to high street lenders. The new fund will allow applicants to borrow up to £175,000 to help them reach build completion. The loan is then repaid when the applicant is able to access a traditional mortgage. The HSBLF can help a wide range of people who are considering a self-build project for their primary residence. Those who own or part-own a home can apply although they need to sell their interest in that property. In addition, the HSBLF applicants will be prioritised in the following order: 1) Applicants with all necessary titles, permissions, warrants and other documentation requested during the application process. 2) Applicants with shorter build programmes. This is to allow us to provide more funding for a greater number of projects – allocating funding to a larger number of applicants between up to April 2018. 3) Applicants with greater housing need. The agent (HSCHT) will assess the project costs and compare this with the applicant’s contribution. If there is a shortfall in cash flow to reach completion stage (where mortgage funds become available), this will be the basis of how the HSBLF amount is calculated. The duration of the fund being available to each applicant will depend on their build schedule. This will be decided before a formal offer is made. The loan offered to the applicant can be drawn down over the course of the project build – at stages previously agreed during the application stage. If you are interested in hearing more about the Highland Self-build Loan contact HSCHT on 01463 233548, or email selfbuild@hscht.co.uk.