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The better you handle your finances, the less likely you are to go over budget

What is a self-build mortgage?

Self-build mortgages are very similar to conventional mortgages – with lenders usually willing to provide up to five times a single income or up to 60 per cent of your monthly income.

Traditional self-build mortgages, also suitable for renovation or conversion projects, release stage payments in arrears, which can cause cash flow-problems. However, there are products available that release funds in advance over six stages of the project, which makes it easier to stay in your current house as the build progresses.

Stage payments for Self-build mortgages

Stage	Timber Frame	Brick and Block	Renovation and Conversion
1	Purchase of land	Purchase of land	Purchase of property
2	Initial costs and foundations	Initial costs and foundations	Initial costs and structural work
3	Erection of timber frame	Wall plate level	Weather tight
4	Weather tight	Weather tight	Plastering and services
5	First fix	First fix	Second fix
6	Second fix to completion	Second fix to completion	To completion

Types of mortgage

Self certification – is ideal if you’re self employed or a contractor and have a number of incomes from different sources or will have difficulty proving your income.

Fixed rate – you pay a set rate for a fixed period of time.

Tracker - it tracks the Bank of England’s base rate by a set percentage, so when it changes the amount you pay changes with it.

Flexible – allows you to make payments that exceed the agreed payment, which can dramatically reduce the term of your mortgage.

Bridging Finance

Who’s it for?
Self-builders and renovators who only require short term finance on their project and don’t have sufficient income to justify full loan amount, but have other sources of finance.

What’s it based on?
The short term loan is based on the equity of your current home and your ability to meet the monthly interest payments, established by proof of income or saving and investments, or a combination of the two.

How long is the term?
This type of loan is typically available for up to three years, allowing two years to complete the work and one year to sell your current property. If you finish your project before the three year period most providers will allow you to repay your loan, but some may charge a penalty.

How much can I borrow?
Most lenders will give a maximum advance of up to 95 per cent on the value of the land and up to 95 per cent of the build costs, to a maximum of 95 per cent of the completed value.

Mortgage Protection

Mortgage payment protection – this covers your mortgage payments in the event of you being unable to work for an extended period of time due to redundancy, disability, accident or illness.

Life insurance cover – will repay your mortgage if either you or your partner becomes seriously ill or dies.

Critical illness cover – would repay your mortgage if you were to get one of many illnesses, such as cancer, stroke or heart attack causing a substantial reduction of your income.