If you are building your own home on a site that you intend to purchase, or have already purchased, you will need a mortgage that is flexible. You will need the facility to draw down the funds in a number of stages as the building progresses. You should not be paying interest on a mortgage that you are not currently using. We will aim to get the lender that can offer a low interest rate, the right amount of borrowings but that they are also willing to lend you the money in different stages of the building work. This is called Stage payments.
1.Shop around - different lenders treat self-build mortgages in different ways. Seek the advice of an independent mortgage adviser.
2.Make sure your adviser specialises in mortgages. Also, mortgage brokers based in provincial towns tend to arrange a higher proportion of self-build mortgages than city-based brokers, for obvious reasons. This additional experience could prove very valuable to you as you move through this fairly complex process.
3.Seek advice as early as possible in the process.
4.Always request about 10-12% additional funding. It saves you incurring the cost of a top-up application and there's no penalty if you don't draw down the funds originally applied for.
5.Be patient - the stage payment nature of the financing means that the mortgage process is inevitably more complicated than with a standard mortgage.
6.If possible, try to limit the number of stage payments that are required. This can keep the cost of financing down.
Warning: If you do not keep up your repayments you may lose your home.