Arranging your finance
Building a home is a substantial investment, and obtaining the right type of finance to fund your project is essential. Self build finance experts BuildStore explains why it pays to get your finances in order, and how to do it.
As a result of the credit crunch, lenders are now more cautious and it will pay you to get your finances in order, to put you at an advantage when making an offer for a plot or renovation property.
In common with the mortgage market in general, there are fewer lenders available generally, and fewer still who will lend for self build, renovation or home improvement projects. The amount many lenders will lend as a proportion of your cost for the land or property and the build or renovation is lower than it was two years ago. The criteria they apply may be more restrictive: for example, some will only lend on projects in their local area; or they may lend for only certain designs or construction types. Some may require the build to be completed within a set timescale. Then there are the differences between lenders' calculations of the affordability of your project, and the way they treat your existing mortgage commitments.
You also need to establish whether you will have sufficient cashflow throughout your project. Even if you have a mortgage agreed, this doesn't always mean that the funds will always be available at the time you actually need them - most lenders who support the self-build market release stage payments through the build only after the work has been done, meaning you will have to find the work for each stage yourself.
So there's plenty to think about, and therefore, the sooner you can start to arrange your finances once you've identified a plot, the better!
Going to a specialist adviser, such as BuildStore, which has over a decade of experience, and understands the self build market will help you here. A specialist adviser will work closely with you to understand your plans and needs for your project; the costs and projections for the build and the finance you require to both purchase the plot, and complete your build with a positive cashflow throughout. Your mortgage will be arranged through the most appropriate lender, many of whom only lend for self build through BuildStore, for your specific needs. In some cases, BuildStore can quickly obtain a 'decision in principal' from the lender - this is a provisional agreement to lend, based on the amount you want to borrow and your credit rating. Whilst this is non-binding on the lender, it will provide you and the vendor of your plot or renovation property with a degree of assurance that you will be in a position to obtain finance to fulfil your offer.
If you have a mortgage on your existing home, you should check whether there are any 'early repayment charges' should you need to sell the house to fund a self build project. Any such penalty charges or lender-restrictions on your ability to move your mortgage product to your new self build may complicate matters. Equally, you may want to ensure that any cash you hold in savings that you intend to use towards the purchase of the plot; build costs and other costs and fees - are accessible when you need them, rather than are fixed for a specific term, or require long periods of notice.
BuildStore is the UK's leading expert in self build finance and works with well known banks and building societies to create a range of self build mortgages to help you find the ideal way of financing your project. Whatever your project, you can be assured that the expert advisers at BuildStore will discuss your requirements in detail and will only recommend a particular product once they have fully understood your circumstances. They have access to a wide variety of self build mortgages from the top lenders as well as the exclusive Accelerator mortgage, which has funded over 14,000 self build homes across the UK.
