Stages of a Build Mortgage

You will find that with a self build mortgage you are required to have the money released in stages, which differs from how a regular mortgage works.  In other words you will find that a self build mortgage is only used for homes that you are building.  They are not used for homes that are pre- built.  In fact you cannot use a different type of mortgage for a home that you are going to build.  You have to apply for a self build mortgage in order to build your own home.

There are stages to building, which is how the self build mortgage is going to work.  The stages for a self build mortgage is going to be purchase of the land, preliminary costs and foundations, wall plate level, wind and watertight, first fix and plastering, and then second fix to completion for a brick and block.  For a timber frame you will find the stages are purchase of land, preliminary costs and foundations, timber frame kit erected, wind and watertight, first fix and plastering, and the second fix to completion.  For a self build mortgage you have to have each stage complete before the next can begin.

What I mean by this is that you have two methods for getting the self build mortgage that you need.  You will find that there is an arrears or advance self build mortgage option.  The arrears self build mortgage offers you the income for the property stage after the stage has been complete.  You will find that the advance self build mortgage is going to offer the mortgage amount at the beginning of the stage.  It is important that you keep to the time table of the stages as well as the budget you have drawn up for the bank in order to keep the self build mortgage in place.

You will find that self build mortgages are based on a portion of the home value.  In other words you are only going to be getting 75% or less of the value of the home in the self build mortgage.  This means that you have to come up with the other 25% or more of the value in order to complete the house.  This offers less of a risk to the self build mortgage lender. 

With this type of mortgage you can also do renovations or conversions on a pre- built home.  This type of mortgage offers you away to get the money you need for any type of renovation that you need done.  You will find that with the mortgage you will still be getting the money in stages of the project.  Keep in mind that for the smaller projects you may be able to get full funding.  Of course this is determined on whether you have a mortgage on the home already.

For a self build mortgage you are going to have to make the mortgage payments on a monthly basis while the project is on going.