The guide to self build mortgage
- What is a self build mortgage?
A self build mortgage is one which the entire amount of the mortgage is not all released at once. It is dispatched in stages of the construction or the building process. The number of stages in which the money is dispatched varies from one lender to another. Majority of the lenders lending self build mortgage do it in five stages. However it is not fixed. The progress of the building may speed or slow down the process.
- Which kind of borrower can take self build mortgage?
Often, when an individual buys a built home, he or she may not be satisfied. The home has bee built by another individual. The specifications are all according to his needs. There is no personal touch. The buyer feels that he or she is compromising by trying to adjust into a home which is not made for him or her. It is in this case that buying your own land and building your own house seems more lucrative and the self build mortgage does just this. The individual selects the land and gets around seventy five percent of the buying price of the land or the value of the land from his lender. Another amount is dispatched when the construction work starts and so the money keeps flowing for the beginning and end of every stage. This way the individual is present at the site of construction. He can give the specifications and the style in which he wants his home built. There is personal satisfaction.
- What are the stages in which the amount is dispatched?
There are essentially two stages in which the amount can be lent. They vary with the completion of the building process.
- Payment at the advance stage: Payment at the advance stage implies that a part of amount from the self build mortgage will be given before the beginning of the construction process. This means the money is given before the work starts. This is an advantage to the builder especially if he is a self builder as this ensures continuous flow of cash and work is not hindered.
- Payment at the arrear stage: This implies that the money is released after the completion of a building stage. This may cause a considerable amount of discomfort to the builder as the cash flow is not constant.
The advance stage payment option is pretty popular. Self build mortgage started off on a small scale in various countries is soon gaining popularity among both lenders and borrowers. Some lenders even offer amounts covering up to ninety five percent of the cost of land and construction of the building. This way, the self build mortgage ensures that the borrower can stay in his current home while his dream home is being constructed. Self build mortgage is extremely beneficial to self builders and freelancers. One must however ensure that the self build mortgage is repaid else there is a possibility of repossession. So take a wise decision and go for a self build mortgage to build your home.
Please read some of our other interesting articles on mortgages below:
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