Getting a self-build mortgage

Last updated: 22 June 2017

If you want to build your own house rather than buy one, mortgage lenders won't pay you a normal mortgage where you get all the money you need in one large sum.

This is to protect the lender during the building process in case something goes wrong and your build is abandoned.

Instead, you'll need to get a self-build mortgage, where you're loaned the money in stages as you build your house.

Only some lenders offer self-build mortgages. An Independent Financial Adviser can help find available lenders who may be suitable for you.

Loan payment stages

Many mortgage lenders won't give you any loan payments until your building is wind and watertight. This is to protect their money, in case you can't finish the house and have to abandon it.

Because of this, you might need to have a lot of money available to pay upfront for the plot of land and the first stages of building. Some lenders may offer self-build mortgages that start at an earlier stage - like when you're buying your plot of land - but most won't.

It's also important to consider when you get your payment for each stage of building. Most lenders will pay at the end of each stage, after they've sent out a valuer to visit the site and make sure it's running smoothly.

Others may agree to pay you in advance before each stage starts, so you can afford to buy materials and pay builders.

Shop around to find the self-build loan that's best for your financial situation.

There's usually a lot more paperwork involved with a self-build loan. You need to show the lender detailed plans for your house, how much you expect it to cost and whether planning permission has already been granted.