Self Build Mortgages
What Are Self Build Mortgages?
Self build mortgages are for anyone who is considering:
- Building your own home
- Renovating or converting an existing property
- Extending your home
Your first step is to secure financing and insurance. This, however, can be a huge pain, simply because there are so many options to choose from. Evaluating what will work best in your situation isn’t always easy.
We like BuildStore for help with the financial aspect of self-build projects. They have mortgages and insurance products tailored specifically to self builders and renovators. They even offer short-term finance and, always a plus, you can get your questions answered by experts.
One of the self build mortgages we really like is the Accelerator mortgage.
It takes into consideration the actual build process and pays out in stage payments so you always have cashflow. You can borrow up to 95% of land costs, up to 95% of build costs and up to 95% of the end value of your new home and stay in your current home while you build.
If you’re renovating, look into the Ideal Home Improvement mortgage. Unlike a traditional home improvement mortgage where the lender will hold back a sum of money until the project is completed and has been inspected by a valuer, the Ideal Home Improvement mortgage provides you with the money you require at the start of each build stage through guaranteed advance stage payments.
You get:
- A single loan to fund the purchase and modernisation costs of a sub standard property — eliminating the need for additional borrowing
- To borrow up to 95% of the costs of buying the property and up to 95% of the refurbishment costs
- To borrow up to 95% of the end value of the property (and you can borrow more if required)
- To stay in your own home until work is complete
Short-term finance may also be a good option for you. BuildStore offers Advance, a short term bridging finance for self builders and renovators. Advance provides flexible lending criteria. Borrowing is based on the existing equity in your current house and your ability to pay the monthly interest on your short term loan.
I love it because it gives you:
- Positive cashflow so can buy materials and labour when you need them, for the best possible price.
- The ability to stay in your current house until the build is complete, saving money and inconvenience.
- The ability to stay on schedule. Other financing options require you to stop while interim valuations are completed. Those delays cost money.
- The chance to repay the loan earlier if you complete your project and sell your current house within three years.
And don’t forget insurance! You’re investing time and money and need to be protected against major problems. Site insurance gives you peace of mind so that if everything goes wrong, you won’t be ruined. And, of course, any lender providing you with finance will insist you have adequate site insurance in place before releasing money to you.
Remember To Claim VAT Back!
You can make a claim if the new home is an ordinary private domestic residence. Please note the following considerations:
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Qualifying products are those goods and materials bought from a VAT registered supplier which are incorporated into the building or the site, and for which you have the original VAT receipt.
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Non-qualifying products include furniture, carpets, curtains, white goods, trees and plants, burglar alarms, professional services, equipment hire, transport of materials and tools used.
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You get one chance to make a VAT claim. Your claim has to be lodged within 3 months of completion of the property. It is advisable to keep good records, and when the time comes to put together your claim, take extra care to get your submission right the first time!