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HomePropertyMortgagesCould you create your dream home by getting a self-build mortgage?

Could you create your dream home by getting a self-build mortgage?

Photo by Rodolfo Quirós from Pexels: https://www.pexels.com/photo/selective-focus-photography-cement-2219024/

A lot of people assume that their only option when it comes to getting on the housing market is to take out a standard mortgage and purchase one of the properties that are already available for sale. However, this is certainly not the only option that is available to you. If you want to find your dream home, the chances are that there are not going to be many properties out there that tick every single box you have. The good news is that there is another option available, and this is to build the property of your dreams.

Many people assume that building their own home is simply going to be out of budget. However, there are self-build mortgages that are available for situations like this, so you should certainly not rule out this option until you have explored it in full. In this blog post, we will help you to get a better understanding of what self-build mortgages are and how they can benefit you so that you can determine whether or not this is going to be the right solution for your situation. So, with that being said, continue reading to discover everything you need to know.

What is a self-build mortgage?

A self-build mortgage is a type of mortgage that is taken out against the property you are building yourself. In a lot of ways, we can say that a self-build mortgage is similar to development finance. However, instead of selling the home once it has been built, you are going to be living in it, which is the key difference.

With a self-build mortgage, the money is going to be released in stages, i.e., as the project progresses. There are two reasons for this. One, it makes sure that the project progresses in the manner it is meant to. Two, it lowers the risk for the lender. Once the construction project is finished, you can refinance into a standard residential rate.

Should you wish to build your own home, you are going to require a specialist self-build product. It is imperative to make sure you spend your time assessing the different lenders and products out there at the moment, especially as self-build mortgages do tend to cost more than residential ones, so do keep this in mind. Nevertheless, despite the greater costs, there can be some key advantages associated with going down this route, which is something we will discuss in more depth in the next section.

The benefits of taking out a self-build mortgage

There are a number of different reasons why taking out a self-build mortgage is something you should consider. So, let’s take a look:

–       Build the property of your dreams – There is only one place to begin, and this is with the fact that you are going to be able to build your dream property if you take out a self-build mortgage. When moving property, a lot of borrowers will spend a significant amount of money on interior design. However, with a self-build mortgage, you can ensure that the space is exactly what you want it to be once you have finished the build. This is the only way to make sure that you end up with your forever home; a home that is perfect for you and ticks all of your boxes. When it comes to making such a large investment, why should you have to compromise?

–       There can be some financial benefits as well – We are seeing that self-build mortgages are increasing in popularity as of late. One of the reasons for this is because there have been stamp duty changes in the United Kingdom in recent years, especially for homes that are valued greater than £925,001. The tax rate is 10 per cent for homes that are valued between £915,001 and £1.5 million. That’s quite a lot of money to pay! However, with a self-build property, this is not something you are going to need to worry about, which means that the stamp duty savings will more than cover the extra costs associated with going down this route.

Take your time to assess the options out there

One thing you should never do is rush into getting a mortgage. Once you sign on the dotted line, there is no going back. Not only are you committing to the mortgage product in question but you are committing to the home and the location as your future, so it is imperative to make sure that it is right for you.

You can spend some time reading up on the lenders you are considering. Make sure that they have a good reputation in the industry.

Aside from this, it makes sense to work with a broker for a specialist product such as a self-build mortgage. Not only will they have access to more mortgage products but they can provide you with independent advice, which will help you during the process.

Of course, you also need to make sure that you can comfortably afford the mortgage repayments. The last thing you want is for your dream home to be taken from you because you failed to keep up on the repayments, so sit down and work out your finances carefully and accurately.

Final words on creating your dream home by getting a self-build mortgage

Hopefully, we have explained everything that you need to know about self-build mortgages, and how this type of product could help to make your dream home a reality. Before you dive into the property market head first, it is always important to understand what options you have both with self-build properties and renovations to existing properties. That way, you’ll have considered all options. You should also ensure that you are aware of the timescales involved with renovating or building from scratch, so that you can manage your expectations on how long it will take before you can move into your brand-new home.

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