DEVELOPMENT FINANCE & MORTGAGES

Funding is available for most types of project, but lenders carefully package up their products to fit the various approaches. Self-build mortgages are available with different cash flow models to suit people who do and don’t need the loan to help acquire the land, for instance, and could be appropriate if you’re planning to make the house your PPR for a reasonable amount of time. These products are usually offered based on individual affordability – but increasingly involve a project viability test, too.

However, the moment a scheme becomes speculative and/or profit-driven, self-build mortgages come off the table. Instead, you’ll need to seek specific development finance. This is usually more expensive in terms of fees and interest premiums, and the loan-to-value ratios may well be reduced. Not surprisingly, in order to properly calculate their risk and exposure, the lender will want a much more detailed analysis of project costs, valuations, timetables, contractor profiles and so forth.

You are always best advised to seek help from a specialist broker who can help you to properly prepare and channel you to the correct product for your building scheme.