Self Build Mortgages

Explore self build mortgages

What is a self build mortgage?

With a self build mortgage, money is released in stages as the build progresses. Some lenders will lend you money to purchase land – typically 75% of the purchase price or value (whichever is lowest).

After this, the money for the build is released in stages. These stages can be fixed or flexible, depending on the lender, but usually there are six (see table below).

There are two methods by which the money can be released during the build – at the end of each stage (known as arrears stage payments) or at the start of each stage (advance stage payments).

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Arrears Stage Payment

With the arrears stage payment method, money is released after a valuer has visited the site and confirmed completion of the stage. This can cause some self-builders cash flow difficulties.
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Advance Stage Payment

The advance stage payment method works in the opposite way, with money released at the beginning of a given stage, before work starts. This method has become popular as it provides positive cash flow during the build, making it easier to stay in your current house while the build progresses.
view the stages

stages of a self build mortgage

The stages of a build depend on whether or not you are building a traditional (brick and block house), a timber frame construction or if you are renovating or converting an existing property. The following table provides an indication of the typical stages:

Brick & Block

Stage 1

Purchase of land

Stage 2

Preliminary costs & foundations

Stage 3

Wall plate level

Stage 4

Wind & watertight

Stage 5

First fix & plastering

Stage 6

Second fix to completion

Timber Frame

Stage 1

Purchase of land

Stage 2

Preliminary costs & foundations

Stage 3

Timber frame kit erected

Stage 4

Wind & watertight

Stage 5

First fix & plastering

Stage 6

Second fix to completion

Renovation/Conversion

Stage 1

Purchase of the property

Stage 2

Preliminary costs and structural overhaul

Stage 3

Wind & watertight

Stage 4

Plastering & services

Stage 5

Second fix

Stage 6

To completion

Important information

Your home may be repossessed if you do not keep up repayments on your mortgage.

This article (Self Build Mortgages) is intended to provide a general appreciation of the topic and it is not advice.

For more information please contact Centrad Limited on 01922 745400 or email enquiries@centradltd.com and we will be happy to assist you.

Article expiry: 06 April 2023