Build Your Own Home with a Self Build Mortgage
Are you looking to buy a home but can’t find one that you like within the area? Are you seriously considering building your home instead of buying one from developers? If financing is a problem, you might want to consider taking out a self build mortgage to make you dream home a reality.
A self build mortgage is essentially the same as regular mortgages people take out when they buy, as opposed to build, their own homes. You borrow funds from a financial or lending instruction, pay interest (of course) and secure such loan with real property. There are two basic differences between a self build mortgage and a regular home mortgage. First, the home, which is the security or collateral in a mortgage contract is yet to be constructed in a self build mortgage whilst in a regular home mortgage, it’s already up and standing. And second, in a self build mortgage, funds are released in installment as construction progresses and not in a single sum like in a regular home mortgage.
There are basically two types of self build mortgage. The first type is the traditional arrears-based self build mortgage in which funds are released at the completion of each stage of the build or construction. This means that builders must have enough cash to get the project under way. The second type, which has been available only recently, is a self build mortgage scheme where funds are released in advance, i.e., before the actual start-up work at each stage of construction. The second type of self build mortgage is aptly called the Accelerator Mortgage. Although, there might not be too many lenders who offer accelerator mortgages, some actually do allow builders to obtain up to 95% of both land and building costs.
A self build mortgage allows you the freedom to customise your home according to your own needs and specifications. It’s also cheaper compared to ready-made homes from developers which are usually priced around 30% above building costs to allow a profit margin. However, it takes more time and effort to build your own home than to buy it. If you choose to be directly involved in construction and manage the project yourself, you have to at least have some of the skills needed. Building a home is not as easy as it looks. You might need the services of 25 different contractors at specific stages of construction to work within your budgeted time-frame. This is very important so as not to waste time and raise the costs. Sometimes, it is for this reason that people do hire project managers to do the job. Hiring experts will ultimately save you a lot of time, money and effort.
So don’t be afraid to dream of a home that’s just for you. There’s help out there. Mortgage companies offer a lot more than just self build mortgages to finance your project. Some do offer advice from where to buy land, where and whom to hire as project managers. If you’ve been searching in vain for your ideal home, perhaps taking out a self build mortgage to do it yourself is a better for you.
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