Want to build your own home in Northern Ireland? Here's how a self-build mortgage can help

Do you dream about building your own home but wonder how you’d be able to pay for it? This is where self-build mortgages can help. Here’s how they work and how you can get one.

What is a self-build mortgage?

If you’re building your own home in Northern Ireland instead of buying one and you require mortgage, a traditional mortgage is unlikely to meet your needs. Instead, the chances are you’ll need to take out a self-build mortgage. The main difference with self-build mortgages compared to mortgages for a house purchase is that instead of getting the money in one lump sum, the lender releases it in instalments.


When do I get the money?

The instalments are designed to fund each phase of the construction process. They are released typically at five or six key stages during the build programme.

Depending on the type of mortgage, these will either be released as:

  • Advance Stage Payments: Your lender will release the payments at the start of each construction stage. This means you can use it to directly cover costs like paying contractors and buying materials. 


  • Arrears Stage Payments: The money will be released to you once each construction stage is completed. However, this means you’ll need to pay for the costs associated with each stage yourself, such as by using savings, until you receive the stage payment. With some lenders, the release of these stage payments may be subject to the lender’s surveyor inspecting the completed stage. While other lenders will accept the builder’s confirmation that the stage has been completed.

How much of a deposit do I need?

Deposits with self-build mortgages work differently to traditional mortgages. With traditional mortgages you will need to have a physical deposit to take one out, but with self-build mortgages it comes down to the cost of the build compared to the value of the finished property. And in many cases, this means you don’t actually need a physical deposit at all.

Most lenders will lend up to a maximum of 75% loan to value on the completed property price. Bear in mind that lenders will typically charge higher rates on self-build mortgages. And there are fewer lenders offering these products. However, there are some excellent rates available so, it’s important to speak to an expert adviser. They can use their knowledge of the market to find the right deal for you.

What is the application process?

Building your own home is naturally a more complicated process than buying one. And so, a self-build mortgage application process requires more paperwork than when you apply for a traditional mortgage. 

You’ll need to provide the usual documents that you would if you were taking out a mortgage for a house purchase, such as proof of your income. But you’ll also need to provide detailed information about your proposed build, such as projections of cost and timeframes.

Self-build mortgage lenders will usually also ask to see proof that planning permission has been granted too. Plus, remember you’ll need to cover your living costs while the project is being undertaken. So if you’re planning to live in a property you already have a mortgage on while your new home is being built, or you’ll be renting, these costs will be taken into account by the lender when it completes its affordability assessment. The lender needs to ensure that both mortgages or the mortgage and rent is affordable for the duration of the build. For this reason, some people decide to stay with family during the build process. 

How we can help you

Don’t feel daunted by the application process - we have a team of expert advisers who can talk you through everything you need to know. And they’ll also handle the whole application process for you too until the first stage is drawn. After this point, you and your builder will need to keep in contact with your lender. But our advisers will stay in touch with you as they’ll ensure that on completion of the build, you can switch the mortgage to a standard rate if possible. This will typically save on monthly mortgage repayments as self-build rates are typically higher. There may be an early repayment charge to pay if you do this but your adviser will be able to talk you through all the costs to find the right option for you.

What are the benefits of self-building?

There are lots of benefits to building your home. Firstly, you’ll get to create a bespoke home that has been designed to your specifications. But you’ll also save on stamp duty costs too as you’ll only pay it on the value of the land, if applicable, rather than on the value of the house once it’s finished. Plus, if all goes well, the total cost you pay for your home can be significantly lower than if you bought it already built. However, bear in mind that builds can take longer than planned and unexpected costs can occur.