NSR Finance: Self Build, Home Build, Self Build Advice.

Stage	Brick And Block	Timber Frame	Renovation/Conversion
1	Purchase of Land	Purchase of Land	Purchase of the property
2	Preliminary costs & foundations	Preliminary costs & foundations	Preliminary costs and structural overhaul
3	Wall plate level	Timber frame kit erected	Wind & watertight
4	Wind & wateright	Wind & watertight	Plastering & services
5	First fix & plastering	First fix & plastering	Second fix
6	Second fix to completion	Second fix to completion	To completion

The Accelerator self build mortgage was launched in 1998 to provide self builders and renovators with positive cash flow during their build.Until it was launched, all self build mortgages released money at the end of each stage of the build. However, this did not suit those self builders who did not have the cash available to complete the build stage and to raise capital had to rely on expensive short term borrowing or on selling and moving out of their current house.As well as providing positive cash flow the Accelerator self build mortgage incorporates many other attractive features. The amount which can be borrowed is high at 95%* of the cost of the land and 95%* of the cost of the build meaning that you can secure your land with a relatively small deposit.

* HIGHER LENDING CHARGES MAY APPLY

As a result, the Accelerator self build mortgage provides a number of benefits for the self builder:

You can secure your plot without having to release the equity in your own home
Stay in your existing home while building your new one if you want
Buy material and labour when you need them and for the best prices because you have the cash available

Funds for the Accelerator self build mortgage are provided by a number of lenders and there is a variety of mortgage products available (fixed rates, capped rate, discounted, tracker etc) making it likely that there will be a product to suit your requirements.

Accelerator Self Build Mortgage Features and Benefits

1.You can borrow up to 95% of land costs, up to 95% of build costs and up to 95% of the end value of your new home.

The borrowing percentages on self build mortgages will vary from lender to lender and some will offer percentages as low as 75%. With the Accelerator Self Build Mortgage, the borrowing percentages are generous at 95%. You can borrow up to 95%* of the cost of your building plot or renovation, so even with a relatively small deposit; you can make sure that your project gets off the ground. You can also borrow up to 95%* of the cost of each stage of your build and this is not subject to any interim valuations.

* HIGHER LENDING CHARGES MAY APPLY

2. Your stage payments are paid at the start of each build stage so you enjoy positive cash flow right through your build.

With the Accelerator Self Build Mortgage, you receive your stage payments at the start of each build stage. This gives you 'cash in hand' right through your build, allowing you to leverage cash purchasing power when you are buying building materials, for example. Having positive cash flow is perhaps the greatest enabling factor for self builders - without it, many simply would not be able to find sufficient cash to fund the build.

3. You can stay in your current house as you build your new home.

The Accelerator Self Build Mortgage is designed to run alongside your existing mortgage as you build. And because there is no need to sell your current house to release the equity it contains to fund the build, you can simply remain there until you are ready to move. No costly furniture storage, no caravan on site - Accelerator is flexible and convenient.

4. You can choose from a range of mortgages and interest rates.

The Accelerator Self Build Mortgage is supported by a panel of leading high-street lenders, including Britannia, Lloyds TSB, Newcastle Building Society, Skipton Building Society and The Mortgage Business. These lenders are happy to direct their self build customers to the Accelerator Self Build Mortgage scheme and some have even offered better mortgages to Accelerator customers than would be available through their branch network! When you apply for the Accelerator Self Build Mortgage, your personal circumstances will be taken into consideration and you will receive a recommendation for the mortgage type, repayment method and interest rate which best suits.

5. You can purchase your land with Outline Planning Permission.

Being in a position to put in an offer on a potential building plot when it becomes available is a huge advantage for self builders. With the Accelerator Self Build Mortgage, you can purchase land with only Outline Planning Permission, so you are free to move quickly if such a plot becomes available. Some lenders will only lend on Detailed Planning Permission, which can take months to be arranged and would also assume that you could provide a detailed specification for the house.

6. If you are self employed, Accelerator offers a self certification mortgage.

Many self builders are self employed and are delighted to hear that there is a self certification option with the Accelerator Self Build Mortgage. The self certification mortgage, funded by The Mortgage Business, enjoys all the usual Accelerator benefits - high lending percentages and no need to sell your current house until you are ready to move.

To enable money to be released in advance and provide a positive cash flow a unique additional cash flow benefit and valuation guarantee scheme has been devised. This provides the additional security required by the lender to allow them to release money at the start of each stage of the build. The valuation guarantee ensures that you can borrow the amounts you need for each stage when you need them as the funds will be released as per the cost of your building work and will not be subject to a mortgage valuation figure.The cost of the valuation guarantee is met by the borrower but the savings made by not needing interim valuations at each stage of the build and the benefits of the positive cash flow provided mean that the overall cost of the project will be lower. In addition because you are not waiting for valuations to be carried out before each stage payment is released, money is released more quickly, speeding up the completion of the project.

Comparison of Advance and Arrears Stage Payments

The Accelerator self build mortgage provides lending of up to 95% of the cost of the land and 95% of the cost of the build with stage payments on the build made at the start of each build stage rather than at the end. The difference between this advance payment and an arrears payment self build mortgage can be seen below. The arrears payment is based on a typical lender lending a maximum of 75% of the land cost and 75% of the build cost with stage payments in arrears.

Brick & block construction

Stage of build	Cost of stage	Standard self build mortgage lending	Accelerator Self Build Mortgage lending	Additional cash flow provided by Accelerator Mortgage at each stage
Purchase of land	£65,000	£48,750	£61,750	£13,000
Preliminary costs and foundations	£13,000	£0	£12,350	£25,350
Wall plate level	£17,000	£9,750	£16,150	£31,750
Wind & watertight	£17,000	£12,750	£16,150	£35,150
First fix & plastering	£12,000	£12,750	£11,400	£33,800
Second fix to completion	£16,000	£9,000	£15,200	£40,000
Final payment from standard mortgage when build complete	£0	£40,000	£0	£0
Totals	£140,000	£133,000	£133,000

(Source: Build Store 28/11/2005)Timber frame construction: Increasing numbers of Self Builders are utilising Timber Frame construction. Most Timber Frame manufacturers require payment in full for the kit prior to delivery. Only Accelerator can provide mortgage funds to purchase the timber frame kit up front.

Stage of build	Cost of stage	Standard self build mortgage lending	Accelerator Self Build Mortgage lending	Additional cash flow provided by Accelerator Mortgage at each stage
Purchase of Land	£65,000	£48,750	£61,750	£13,000
Foundations	£13,000	£0	£12,350	£25,350
Timber frame kit erected	£20,000	£9,750	£19,000	£34,600
Wind & wateright	£14,000	£15,000	£13,300	£32,900
First Fix & plastering	£12,0000	£10,500	£11,400	£33,800
Second fix to completion	£16,000	£9,900	£15,200	£40,000
Final payment from standard mortgage when build complete	£0	£40,000	£0	£0
Totals	£140,000	£133,000	£133,000

(Source: Build Store 28/11/2005)

Frequently Asked Questions

Can I obtain a mortgage if I only have outline planning permission?

Yes. Funds can be advanced to pay for the land even if it only has outline planning permission. Detailed planning permission is required before building work commences.

Why do standard self build mortgages not release funds until the end of a build stage?

Lenders want to make sure that the money they lend to you is protected so that if they have to repossess a partly completed house they will get the money they have lent back. For this reason they wait until you have completed each stage of the build and have had an interim valuation completed before releasing the funds.The Accelerator self build mortgage and Advance short term building finance are different. With them you get money at the start of each stage of the build and there is no need for interim valuations. However, the lender is still protected but this time by the valuation guarantee which the borrower pays for before drawing down their first payment. This protects the lender if the partially completed property is repossessed and there is a shortfall when it is sold by the lender.

How much can I borrow?

This depends on a number of things. For example whether you are borrowing on your own or with someone else and on what other monetary commitments you have. It also depends on whether or not you have a mortgage on your current house and are planning to stay in it while you build your new home.The standard income multiples used to calculate the amount you can borrow are 3.5 x single income or for joint incomes, the higher of 3.5 x income 1 plus income 2 or 2.75 x joint income. However, other financial commitments you have are taken into account.The amounts of any bonus, commission and overtime you earn can also have an effect on how much you can borrow as can income from "Buy to let" properties.

How can the Accelerator Self Build Mortgage and Advance short term building finance lend money in advance of the build stage?

We realised that standard self build mortgages caused some self builders to have cash flow problems because money was not released when they needed it - at the start of each stage of the build. We also understood the reason why lenders take this approach - to ensure that their money is protected by only lending when there is sufficient value in the property to support the lending. We then developed the valuation guarantee scheme which gives the lender the protection they need to lend money before the value has been added to the property. The valuation guarantee gives the lender protection if the partially completed property is repossessed and sold for less than has been lent. This protection means that the lender is therefore prepared to lend money at the start of the build stage to people who have an Accelerator self build mortgage or Advance short term building finance.

Can I get a decision in principle?

Yes, an agreement in principle is available on its mortgages. This lets you know that the lender will lend to you and how much they will lend.

When should I apply?

Applying for a mortgage should be one of the first steps taken in self build. It will enable you to know the extent of your budget and if you have not yet purchased land, obtaining an agreement in principle can put you in the same position as a cash buyer enabling you to move quickly on land. This is especially useful if you are considering purchasing a plot or property at an auction.

How can I stay in my current house while I am building my new one?

Many self build mortgages can now run alongside the mortgage you have on your current house while you build your new home. This can be a more economical way of structuring your finances than selling your current home and moving into rented accommodation. This is because as well as avoiding the hassle and cost of an interim move, the cost of rented accommodation is likely to be more than your current mortgage.Your current house is ignored for the purposes of your Accelerator self build mortgage with this mortgage being based on the projected value of your new self build home.If you do decide to remain in your current house while building your new home most lenders will take this into account when calculating the maximum amount you can borrow. They do this by reducing your stated income by an amount equivalent to 6 times your current monthly mortgage payment before calculating the maximum amount you can borrow.

How long do I have to build?

Under the Accelerator Mortgage and Advance short term finance the building work must be completed within 24 months.

On a self build mortgage do I pay interest on the whole amount I want to borrow or just what I have borrowed so far?

You only pay interest on the amount you have actually borrowed. This means that as your build progresses and you borrow more, your monthly interest payments will increase.

Can I choose the mortgage repayment type I want?

Yes. You can have your mortgage on a capital and interest basis (where each month you repay some of the capital you have borrowed as well as interest) or on an interest only basis (where no capital is repaid until the end of the mortgage term with the capital being repaid by some sort of investment policy such as an ISA, an endowment plan or a pension plan). You can even split it so that it is partly capital and interest and partly interest only.On some mortgages you pay interest only during the build regardless of the style of mortgage you choose while with others you pay the style chosen both during and after the build.

What is the valuation guarantee fee for?

This is used in the advanced stage payment mortgages (Advance and Accelerator) to give the lender the protection it requires to allow it to lend you money at the start of each build stage rather than wait until the end of the stage when the value has been added.

Can I get a mortgage if I am self employed?

Yes, we offer mortgages for the self employed. Most lenders will want to see either accounts or self assessment documentation but we do have a self certification mortgage for those self employed people who are unable to provide proof of earnings.

Will you lend me money to build a holiday home?

We are not able to lend money for the construction of holiday homes.

How do I work out how much I need to borrow at each stage of the build?

A self build mortgage is split into a number of stages and you need to work out the amount that you need to borrow at each stage. If you are working with an Architect or Architectural Technologist they will be able to help or you can go to a Quantity Surveyor.

Can I manage the project myself?

Yes, both the Accelerator self build mortgage and Advance short term building finance allow you to manage the project yourself using as many subcontractors as you wish. The only condition is that the work is suitably certified either by a qualified architect, architectural technologist, NHBC or other recognised structural warranty guarantee.