What is a self-build mortgage and can I get one?


A self-build mortgage is a type of home loan that allows you to build your own property. It’s different from a regular mortgage because they’re not available on the open market, so lenders have to create their own products specifically for self-build projects. Unlike buying land or choosing a property off plan with no guarantee of it ever being built, self-builders are able to move into their new home just months after construction begins. This means they can avoid paying rent while they wait for their dream house to be built – saving big bucks!

Self-build mortgages are for people who want to build their own property

A self-build mortgage is a special type of loan that you can use to build your own home. It’s not for everyone, but if you’re thinking about building your dream home from scratch and want to get started right away, then this may be a good option.

Self-build mortgages aren’t available everywhere (yet), so check with your local bank or building society before applying for one.

The interest rate on self-build mortgages tends to be higher than standard mortgages because lenders are taking more risk in lending money for something that isn’t being built by an established house builder–the lender has less information about the quality of materials being used and how long it will take them to complete the project.

When are Funds Released with a Self Build Mortgage?

When you apply for a self-build mortgage, the lender will look at whether or not it’s viable for them to lend money based on your plans for construction. The lender will want to know exactly what building materials are going into the property, how much they cost and how much profit they expect to make when they sell it later on down the line.

The lender will also want proof that there is enough demand in your area for new properties (e.g., through house price research) before releasing any funds at all. There are many different types of self-build mortgages available, so it is important that you find out what they are before applying for one. You should also check whether or not they offer any guarantees and if they do, how long they last for and how much cover they provide.

What Types of Self Build Mortgage are Available?

There are three main types of self build mortgage:

  •         Partnership mortgages allow you and your builder or developer to work together on the project, with one person acting as guarantor and the other taking on responsibility for the actual building work. The lender will offer a reduced rate for this type of arrangement because there are two people contributing towards the purchase price.
  •         Joint venture mortgages allow you to buy land or an empty property with another person or people, then agree on how much each partner pays towards it before it is developed. Once again, there is usually a lower interest rate than with a normal mortgage deal because there are multiple contributors to the purchase price.
  •         Conventional self-build mortgages provide up to 95% of the cost of developing your property, subject to certain conditions being met (such as providing evidence that you have enough money).

How Much Money Can I Borrow with a Self Build Mortgage?

When applying for a self-build mortgage, you’ll need to provide evidence that you have enough money saved up for the deposit on your plot of land and enough savings to pay for other costs such as building materials, labour and building regulations fees.

You can borrow up to 95% of the purchase price or cost of your self-build project, whichever is lower. You’ll need a deposit of at least 5%.

The maximum loan amount you can borrow will depend on the size of your self-build project. How much money you can borrow will also depend on how much equity you have in any property that you sell to fund your self-build.

You’ll need to meet certain criteria to get a self build mortgage:

You must be able to show that you have enough money available to fund the building work. This can include cash savings and funds raised from selling another property or your existing home.

You’ll need proof that you can afford the repayments even if interest rates rise in future years.

To be sure how much money you need and to break down all the details for your new plan, it is best to hire a reputable quantity surveyor from Brisbane and you will get all the right answers.

What is the Criteria for a Self Build Mortgage?

The criteria for self build mortgages varies from lender to lender. However, there are some general rules that most lenders will apply:

You’ll need to have enough savings or income to cover the initial deposit on your land purchase; This will be around 5-10% of the total cost of your property. The balance can be paid off in monthly instalments over an agreed term, typically 25 years.

The remaining costs will include design fees (these can vary massively), planning permission fees and any other additional costs associated with building your home from scratch.

Building your own home is a big commitment, but it can be very rewarding too. If you have the funds and the skills required to build your own property then this could be perfect for you. However, if you’re not sure whether or not self-build mortgages are right for you then it might be worth speaking with an expert first before taking any further steps forward.