Mortgages
Where self build mortgages differ from normal mortgages is that the mortgage can be supplied in stage payments to coincide with the completion of parts of the project. This allows the builder to have ongoing finance while giving the lender some protection in case of failure of the project.
Different lenders may vary slightly as to when they make the stage payments. There are usually between 4 and 6 stages available. See Buildstore’s Accelerator mortgage for an example of stages.
The stage payments are usually triggered by an inspection by a surveyor who issues a certificate which you send to the lender. Normally you have to pay the surveyor’s fees.
The problem comes if you run out of money between stages and are unable to complete the stage you are working on. At this point you may want to fall back on some type of short term finance. There are several possibilities -
- you may be able to stretch your credit with suppliers
- a bank loan
- a bank overdraft (expensive)
- a bridging loan with a bank may be an option (possibly expensive)
- debit card (though once again, expensive)
- loans from friends
If you have assets to sell then it is worth carefully planning at what point to do this. Particularly if you are selling your present house to fund the one you are building, it is important to be able to rely on getting enough money from it to keep the building process going on the new house. If the worst should come to the worst and you cannot afford to finish the house then remember that a shell which is wind and weather tight is worth considerably more than one which is nearly so. A prospective buyer can visualise finishing off the inside of a well built shell but may be nervous about taking on something which may be leaking or defective.
There are a few building societies which have been supporting ecological self build over the last few years with the most forward-thinking one by far being the Ecology Building Society. Other self build mortgage suppliers include -
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| Ipswich Building Society | Lloyds TSB | Norwich and Peterborough Building Society |
