Self-Build & Conversion Mortgages
Over the years, we’ve helped a number of clients finance their self-builds and conversions with some spectacular properties at the end of them.
These types of mortgages can often pose more challenges than a traditional mortgage but, as our self-build and conversion clients know, they’re worth it in the end.
Self-build Mortgages
As the name suggests, self-build mortgages are loans that you take out to fund the house that you’re building. This type of mortgage usually releases funds at different stages along the build process to ensure that the money is spent as planned; that you don’t run out of money; and to reduce the lender’s risk.
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When the cash is actually released, and over how many stages, varies lender to lender. However you may typically expect to receive funds at the following stages:
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Purchase of the land
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Laying of foundations
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Construction of the property up to the eaves
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Completion of the roof and the property being wind and watertight
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First fix
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Second fix
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Confirmation of the property’s completion​
There are two main types of self-build mortgages:
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Arrears – the funds are released to you once each stage has been completed. This is ideal if you have a cash flow that you can access and then repay at each point.
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Advance – the funds are released at the start of each stage so that you can use the mortgage funds to pay for the work.
As you’d expect with the higher levels of risk involved with self-build mortgages, the amount of interest that you pay is higher than with a standard residential mortgage.
Conversions & Rennovations
When considering a renovation or conversion mortgage, it’s important to speak to a broker to see if you need such a specialist product or whether you could utilise a more standard mortgage, thus securing a more competitive rate of interest.
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If, however, the property that you’re looking to purchase is currently uninhabitable (no working kitchen or bathroom), a specialist product like the Conversion and Renovation may be a better fit.
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These mortgages follow a similar model to the self-build mortgages above, with the option to either receive the funds in advance or in arrears to ensure that your project runs as smoothly as possible.
When do you speak to a broker?
We’d always recommend speaking to us as soon as you begin the thought process of a more complex query like this. Our brokers are able to sound out your options, help you understand the most efficient way of moving forward and make recommendations for many aspects of the home building process.
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For us it’s far more straightforward to be involved from the beginning than to jump in half way through. However, if you’re halfway through a project and are just not sure how to fund the next step, don’t let that stop you from getting in touch as we will likely be able to still be of assistance.
