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Self Build Mortgages Explained

how do self build mortgages work

Self Build Mortgage

Self Build Mortgage products are now a viable option for those wanting a low-cost home and willing to put in some hard work.

According to self build advice company Buildstore, the numbers of people doing self build themselves are remaining steady but TV programme's such as Channel 4’s Grand Designs, coupled with high house prices, are fuelling interest. But many people are still put off by the perceived amount of capital required, the time it can take and a lack of experience.

Why Do Self Build?

Self-build can offer many benefits over a traditional house purchase, such as typically being worth 30 per cent more on completion than it cost to build. Another important factor is individuality; self build customers can make their properties unique and can customise their homes to match their own specific needs.

The most important function of the self-build scheme is to oversee and manage the project from start to finish, rather than actually doing the building themselves. These days there is a lot of help available from companies such as Buildstore which offers advice on everything from finding land and buying materials to finding a self build mortgage and appointing a project manager.

Buildstore spokesman John Hay says: “Self-builders usually get a project manager or architect and get them to manage the build. Their fees are usually based on a percentage of the costs. Project managers offer varying levels of involvement from just negotiating contracts and getting quotes, to overseeing each stage through to completion. Essentially the more you spend on a project manager, the quicker the job will get done.”


those wishing to manage the project themselves, be warned that it is not as easy as it looks. Linda Will is managing director of Accord Mortgages, which offers loans in conjunction with Buildstore. She says: “The biggest mistake is people not treating it as the project it really deserves to be, and it’s a more difficult project if they don’t have any of the skills themselves. You might need 20 different tradesmen in the right order at the right time, and it’s when time scales slip that’s costs go up.”

How do Self Build Mortgages Work?

In the past the only types of mortgage on offer were arrears staged-payment self build mortgages, which meant a stage had to be finished before funds were released and customers needed to be cash rich at the beginning to get the build under way.

But, together with lenders such as Norwich & Peterborough, Accord Mortgages, Skipton Building Society and Nationwide, Buildstore now offers advance staged-payment self-build mortgages called the Accelerator mortgages.

Accelerator Self Build Mortgage

With the accelerator self build mortgage funds are released prior to the start of each stage and customers can borrow up to 95 per cent of the land costs and up to 95 per cent of the construction costs.

Key Benefits of t he Accelerator Mortgage

  • Money released in advance of each stage
  • Up to 95% of land costs
  • Up to 95% of construction costs
  • Up to 95% of the final value of your home
  • Competitive rates of interest
  • Ability to stay in your home until your new one is complete

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