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The self build process
Welcome to the World of Self Build
Have a read through the requirements and processes or first give me a call to discuss your project.
This will save you a lot of time T 01923254760 M 07973335793
It takes about 3 months to arrange a self build mortgage and costs between £2000 to £5000 to arrange.
See fees below.
Self Build Finance are available for
Self Build New Homes,
Large Renovation Projects.
Commercial Conversions.
Barn Conversions.
Main Structure
All standard structures will be considered Masonry, Timberframe, Steel Frame,SIPS, Passive House, Eco Homes ICF.
Shipping Containers will not be considered..
Some lenders will not accept 100% Timber clad (call to discuss)
The only stipulation is that when completed the Property must be your main home
Please be advised you need to be organized and bear in mind this is a paper torture exercise but worth it in the end.
You will have a wonderful home and an asset
The formula is simple
Land + Build Costs + Contingency + Sweat = Dream Home.
Types Of Self Build Finance
Arrears, You put in your own money first and build to a certain stage and the surveyor values the work done. Can be problematic, You may have spent more than the surveyor thinks it’s worth. If you own the land then this method usually is best because the lender will remortgage the land value up to 80% and sometimes 85% based on affordability.
Advanced, Funds are released based on the cost of the project and agreed upfront so you know you are guaranteed the funds, Ideal for Timberframe where a large deposit is required upfront and also an advantage when dealing with suppliers.
Some lenders will advance the funds to allow you to buy the land/plot with outline planning permission but bear in mind an insurance premium will be charged to you to cover them in the event you cant get full planning or have to wait for full planning to come through.
Special Concession during the build
Most of the Self Build Lenders will offer an interest-only concession during the build which means interest is charged only when you draw down the funds not on what you apply for on day one. Budget around about 5% during the build.
Once the build is complete most lenders will then allow you to switch on to one of their residential products at the normal residential rate at the time.without an early repayment charge.
The funds will be released in stages this is agreed by the lender before the offer is issued.
The Stages
1 Purchase of Land/Property.
2 Preliminary Costs & Foundations & Structural overhaul.
3 Wall Plate Level Timberframe Kit Erected .Wind & Watertight
4 Plastering & Services
5 First Fix.
6 Second Fix to Completion
Fees associated with Self Build Finance
1 Valuation
2 Broker Fee
3 Arrangement Fee can be added
4 10 Year Warranty Cover
5 Site Insurance
7 Inspection Fees, during the build to make sure work has been done, so further funds can be released.
8 Security Insurance if borrowing advanced stage payments or outline planning.
9 Solicitor Fees
The Deposit
There is some Self Build Lenders who say they will lend 95% of Land and Build Costs and we tend to approach them first to see what is available.
But realistically you will need a Deposit
Land Price 20%
Build Costs 20%
Contingency to Cover Build Costs and Fees of about 10% to 15% of the build costs.
Build Costs
It is important to Cost the project as if you are employing a builder to do the job the reason for this is because if the lender has to repossess the property when it’s half built they need to be sure there are sufficient funds to finish the build.
You apply for the full cost of the project but only use what you need, as interest is only charged on what you use not on what you apply for.
If you already own the Land/Plot or you may have already started your build.
The lender will remortgage the land/Plot up to 80% to 85% so you have funds on day one. based on affordability
Affordability
Rule of thumb The MAX you can borrow is 4.5 times joint income, can be as high as 5 Times depending on lender but budget 4.5 times. The lender needs to be sure you have the funds to make the mortgage payments, So everything revolves around affordability.
Realistically have about 25%-30% of the total costs of your project Land + Build Costs + Contingency in cash if you don't already own the land.
Pit Falls that affect the Self Build
All Self Build Finance is based on affordability
If you have an existing, Mortgage/Renting, HP, Car loan, Personal loan, Credit Card Debt, etc or any committed financial expenditure, this will be deducted from the Max you can borrow.
You need to be clear of any debt problems, defaults for at least 3 years and if you have been bankrupt, You need to have been discharged for a minimum of 6 years before the lender will consider your application.
Put your life on hold until you get your Finance offer, please don't get Divorced, Change jobs, go self-employed, start a business, apply for a loan, open a new bank account, or get a car loan as this will all add to the delay.
The Process
Stage 1
I Will send you a Self Build Questionnaire after you enter your details below
I would then introduce you to FCA-regulated Mortgage Adviser or House Builder
This questionnaire covers all the questions the lenders will ask to get you a decision in principle.
If you are successful and you wish to proceed you will then move on to stage two.
You will need to go through a full FCA-regulated fact find and ID verification.
Your adviser will call you to arrange this.
Some lenders require a small fee to start the process £95-£120 paid directly to them.
When you get the Verbal Decision from your adviser and lender based on the information you have provided.
The Paperwork will then need to be completed
Self Build Documents Required.
STAGE 2
Terms of Business Signed.
Fee agreement signed.
Application Form Completed.
ID Passports / Driving Licences/ Utility Bills less than 3 months old.
3 Months Bank statements for each individual, lenders wont accept screen shots must have name address and bank logo on each statement.
Please bear in mind that your income will need to be verified and the lender will only consider what has been declared to the Taxman.
3 Months Pay Slips & P60 if Employed. minimum employment 3 months and be outside the probation period.
Self-employed SA302S Accounts for a minimum of 2 years. Tax arrangements
Directors Ltd 3 years accounts all companies if you own more than 25% of the company shares, You will be Treated as Self Employed.
Six Months Business Bank Statements Self Employed and Ltd
You will also need a full credit report for each individual Experian or checkmyfile etc
Copy of Planning Permission or outline planning.
Copy of Plans / Drawings / Elevations
Costings For the Project (Deposit + Loan = Costing of Project).
Project Timeline What stages funds will be required.
SAP Energy Report. (some lenders).
Confirmation of Deposit either bank statement or confirmation if you own the land/ site, land registry.
Architects Details.
Builders Details
10 YEAR Structural Warranty or Architects Cert (dependent on the lender).
Site Insurance.
Covid income Form if required
Interest Only Declaration form.
Testimonials
I would recommend James Blair without hesitation. He has been helpful, realistic and practical throughout in guiding me through the process, which I'm quite certain would have been very challenging to negotiate without his input.
Thank you again for your help!
Best wishes,
Chloe T
Self Build Mortgage
James Blair’s support for our home-build mortgage was immeasurable in enabling us to complete our project. His experience in guiding us as pensioners to a successful conclusion was vital. Always encouraging and helpful in talking any issues through, we have no hesitation in recommending his services to any future prospective applicants.”
Dr. Carl C OBE Dorothi C
Self-Build Mortgage.
I would recommend James Blair .
James was excellent throughout the whole process. Pragmatic, straight-talking, and approachable. Ours was a tricky self-build mortgage and without James's assistance, i don't think we would have secured lending. Highly recommended!
Lorna M
Development Finance
Development Finance.
Development finance is used by developers to finance the land purchase and also the build costs. Deemed short term finance between 12 to 24 months
This can cover just one unit up to an estate of houses or block of flats.
Please bear in mind that if you are going to develop your garden, this may be treated as regulated development finance (call to discuss).
The Funding is usually released in stages, in arrears as the build progresses.
The MAX the lenders will consider is usually up to 70% of the land cost and 100% of the build costs.
The total loan plus interest must not exceed 70% of the gross development value.
But you will find the best deals are with the lowest cost of capital is 60% of the land cost and 100% of the build cost.
Most development finance loans are set up to allow monthly interest charges to be added to the loan and interest is only charged on the funds that are drawn down.
The interest is then repaid along with the original money borrowed when the project is completed.
This makes sure the developer keeps control of the cash flow.
As units are sold during the course of the development, most lenders will require some or all of the proceeds to be used to reduce the amount outstanding on the development finance facility.
Before any facility is offered, the lenders will want to see a clear feasibility study and you must have an exit plan before they agree to your loan.
1 Sale of Property
2 Refinance on to a term loan
3 Refinance to another lender.
The Land/Plot price is all-important paying too much and you are doomed and I would recommend a great book if you are new to the process covers a lot of the pitfalls
Property Development, Lloyd Girardi
They use a simple formula to calculate the land price
GDV – (Profit + Build Costs + Cost Of Finance + Other Costs) = Land Value.
If you are planning on running a development give me a call because we can offer a turn-key option a
Finance and Build Package.
Call today 01923 254 760