Financing your self-build project FAQs

Financing your project
FAQs

What level of deposit will I need?

Presently you will need to have a 15% deposit.  That’s 15% of the cost of the land/property and build costs.  Lenders will not lend on land alone, however, it may be possible to borrow against the equity in your present property to fund the land purchase.  Lenders will require your deposit to be in liquid funds and they will require a bank statement during the application process to evidence this.

How much can I borrow?

Lenders will take the cost of any debts you have, such as rent, mortgage, loans, credit cards, hire purchase, childcare costs, maintenance etc and multiply the cost of these by 12 to achieve the annual cost.  They will then deduct this from your single or joint annual income and apply a multiple of around 4 times.  This will give you a rough measure of how much you can borrow. 

Does the site need to have planning permission?

Yes, the lender will require the site to have planning permission in place. You will need outline or detailed planning permission with a minimum of 12 months remaining on this.

What are the best ways to find land or a project?

Register with BuildStore’s landfinding database at www.plotsearch.co.uk.  Also look at the following – newspaper small ads, estate agents and solicitors, local builders, farm land and garden plots, council planning portal, etc.

What is a typical interest rate?

As a rule of thumb you’re looking at between 5 and 6%.   That would mean on a £100,000 mortgage over 25 years, taking a median rate of 5.5%, your monthly cost would be £614.09 on a capital and interest basis or £458.33 on an interest only basis. 

Is it possible to have an interest only mortgage?

Yes it is.  Many self builders will opt to pay interest only during the period of the build, switching to repayment when the build is complete.

Can I remortgage when the property is complete?

You can but typically the lender will have an early repayment charge for a period of 2-3 years from the initial release of funds. Lots of lenders will now allow you to switch to one of their standard residential mortgage products on completion of your build, without penalty if you stay with them.

How are the funds released?

Funds are released in stages with the initial release to purchase the land or project then in stages during the project to meet the needs of your build program.  Payments can be made in advance or arrears depending on the location and individual requirements of you and your project.

Will I need to have details of my build costs?

Before making an application we will require you to have a clear idea of the work you wish to carry out and the build costs to achieve this.  We can help you with the costings for your build project.  Please get in touch if you would like more information on this service and the project support services we offer.

What else can I do to help me when I find a suitable opportunity?

If you have a mortgage at present, we would recommend a chat with one of BuildStore’s whole of market mortgage advisers.  They will review what you have at present and ensure that you are properly set up to move quickly on the plot of land, conversion or renovation project when it comes along.