Make the most from a self build mortgage
In a self build mortgage, the money is released not all at once but in stages as the building proceeds towards completion. The entire sum is not released all at a time. Initially, the self build mortgage will be given as a certain amount to buy the land before construction begins. The amount that is lent varies between sixty five to seventy five percent of the value of the land or the price at which the land is being purchased, whichever works out cheaper for the lender who is lending you the self build mortgage amount. After the initial amount has been released, the money required for construction will be lent in stages.
The number of stages will vary from lender to lender. Majority of the self build mortgages will be lent in five stages of the building construction process. The release of money is flexible depending on progress of construction besides many other factors.
When the construction has begun, it can be agreed upon with the lender to release an amount which can cover at least seventy five percent of the entire cost of construction depending on the proceedings of the project. There are basically two methods of obtaining the amount required for the construction purpose. The payments can be made at two stages namely:
- Advance Stage: This implies that a part of the self mortgage build amount is lent before the commencement of a particular stage of the building process. This method has become pretty popular for the builder has a continuous flow of cash from the self build mortgage and hence the work is not interrupted or stopped temporarily due to lack of cash.
- Arrear Stage: This implies that a part of the self mortgage build amount is lent after the completion of a particular stage of the building process. Here the lender visits the site of construction and releases the payment of the self build mortgage only after he has valued the build. Sometimes, this can create some inconvenience for independent builders as the cash flow is not continuous. But the lender is at a greater advantage as he is assured that his money from the self build mortgage is put to proper use.
There are many individuals who are generally not too comfortable with the idea of purchasing a built house. For starters, the home was built by some other individual according to his specifications. There may be something which is not the way you want, but you still have to put up. Well, there actually is no need to compromise for you can build your home according your specifications with a self build mortgage.
You are involved in the building of your home right from stage one where you decide the land where you wish to construct. Not just that, you are also designing the house according to your personal needs and requirements. Seems like a dream, isn’t it? To ensure that the dream turns into a reality, all you have to do is just obtain a self build mortgage.
Please read some of our other interesting articles on mortgages below:
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