Scottish Field


Ever felt that building up your finances is a lot more difficult than building your new home? There are comparison­s, but fear not. There is plenty of help if you know where to look or who to look for you


To build a house you need plans for what the finished building will look like and a location to build it... and money, lots of it. Raising the finance is eerily similar to building. You need detailed plans for creating that final amount of cash and part of the success is finding the right location to save and to find the finance.

So many people become overwhelme­d by the thought of financing that they put aside their dreams of building their own homes. Don’t be one of them.

Not only will your architect and builder become your new best friends on a self-build project, but also an independen­t financial advisor should be included on your new list of BFFs. Getting the right help is invaluable.

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 that 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 static caravans; 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 whole build process more flexible. Also check out building societies and ‘ethical finance’ where good deals are offered to people who are building very eco-friendly properties. All that insulation will not only save money on heating bills; it could save you money on your financial package.

Also keep in mind that a self-build mortgage may also be suitable if you are taking on a renovation, conversion or extending your existing property.

Many lenders, be they banks or building societies, will often only loan money on a fixed-price contract, or on an all-trades basis under the direction of a suitably-qualified project manager.

Do not forget that with ‘package deals’ where you buy a kit house and building services from an existing company – and perhaps even the land – they often offer, or source, financial packages. This can save a lot of leg work and grief.

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