Self Build Mortgages

The Financial Conduct Authority does not regulate some forms of Buy to Lets. Your property may be repossessed if you do not keep up repayments on your mortgage.

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Secure the right funding to get your self build project off the ground

At Farnham Finance i’ve built and earned a stellar reputation for supporting self build borrowers to secure funding. Getting the right mortgage advice and the right finance in place is crucial to the success of your self build project.

I’ve established and maintain relationships with UK lenders to ensure applications progress smoothly and efficiently. I understand what lenders are looking for and can guide you through every step of the process, offering expert advice from start to finish.

Self build mortgage applications are complex and time-consuming. Although, it’s important to present a solid case to support your application, satisfy the lender’s criteria and give yourself the best chance of securing a mortgage offer.

Self build mortgages have grown in popularity for a number of reasons. Some people have struggled to find the perfect home that ticks all their boxes, while others are tired of bidding wars and want to escape the competitive housing market.

Whatever your reasons for embarking on a self build project, I can help you secure the finance you need to make it happen!

The Financial Conduct Authority does not regulate some forms of Buy to Lets. Your property may be repossessed if you do not keep up repayments on your mortgage.

Self build mortgage FAQs

What are the criteria to get a self build mortgage?

As you might suspect, the application process for a self build mortgage is more complex than applying for a residential or a buy to let mortgage, for example. To approve self build finance lenders require comprehensive documentation including but not limited to:

A detailed project plan outlining the timeline for each stage of the construction process such as land purchase, foundation, walls, roofing and completion
Architectural drawings including floor plans, elevations and sections showing the exact dimensions, layout and design features
Proof of planning permission from your local authority or proof that a planning application has been submitted
Evidence that the construction complies with local building regulations
A detailed breakdown of all costs including land, material, labour, fees and contingency funds
Cash flow projection
Personal financial documents such as proof of income and credit history
Signed contracts with accredited builders and contractors
Proof that your builder has adequate insurance
Self build insurance and a structural warranty
Proof of land ownership or the land purchase contract
Development surveys detailing the condition of the site
Valuation report

Lenders require extensive documentation to assess whether your self build project is viable and financially sound. Having these documents ready will speed up the approval process and improve your chances of securing a self build mortgage.

How much can you borrow for a self build mortgage?

No two self builds are the same and there’s a wide range of factors that lenders will assess when calculating how much you can borrow including:

How much deposit do you need for a self build mortgage?

Self build projects are considered high risk so lenders typically require a bigger deposit for self builds than they would for standard mortgages. Most self build mortgages come with a maximum loan-to-value of around 60% to 85%, so you’ll typically need at least 15% of the total project cost as a deposit, although in some cases it could be as much as 40%. If you already own the land, this might count toward your deposit, reducing the amount of cash you need upfront.

How does a self build mortgage work?

For a self build mortgage, funding is typically released in stages as the construction progresses, rather than as one lump sum. This ensures that funds are available at critical points during the build and the lender can track progress to mitigate risk. Here’s how payments are typically released:

Land purchase (if applicable)
Foundations
Basic structure
Once the roof is on and the building is watertight and weatherproof
First fix; plumbing, electrical wiring and plastering
The final payment is made on completion including finishing touches

Lenders will inspect each stage of the build to confirm the work is complete before releasing the next payment. Funds can be released in advance or in arrears of each stage. The payment schedule and stages can vary depending on the lender and the complexity of your project.

Is a self build cheaper than buying a house?

A self build project could potentially be more cost-effective than buying a house. However, each self build home is unique and costs can vary significantly. Generally speaking, most properties on the market will cost more than a comparable house built from scratch.

One of the biggest costs for a self build project is the land. Land prices vary depending on location and there is a limited supply of land available for self build in the UK. It can be expensive and drive up the total cost of the build.

There are several ways to keep costs of a self build project down. For example, if you’re able to do some of the work yourself you can save on labour costs.

Do you pay stamp duty on a self build?

In most cases, you do not pay Stamp Duty Land Tax (SDLT) on the construction of a self build home. Stamp duty is only applicable on the purchase of land or an existing property. If you are buying a plot of land to build on, you will need to pay SDLT on the purchase price of the land.

If you buy an existing property to demolish it and build a new home, you would pay stamp duty on the property purchase price. The fact that you’re planning to demolish the property does not exempt you from paying SDLT.

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

MEET YOUR ADVISER

Meet Robert Lewis-Crosby

Robert is an experienced mortgage adviser specialising in landlord and portfolio mortgages. He has a customer- centric philosophy towards understanding customer needs and delivering value – this is reflected in everything he does from his communication style to his low advice fees. Speak to Robert today about your mortgage requirements.

Ready to build? Let’s make it happen

The Financial Conduct Authority does not regulate some forms of Buy to Lets. Your property may be repossessed if you do not keep up repayments on your mortgage.