Self Build Mortgages
Mortgages for self build are a specialist product and many lenders do not offer them. However the self build mortgage market has expanded considerably in recent years and so as long as your project is correctly planned and presented, you should have little difficulty in obtaining a mortgage.

The major difference between a self build mortgage and a conventional house mortgage is that with the self build version you will receive your mortgage funds in several stages as your house build progresses compared with a single lump sum. Within this overall structure there are a number of variations.

How do Self Build Mortgages work?
A self build mortgage may cover the purchase of the building plot (depending on the lender). For the build itself, the mortgage will be paid to you in 4-6 stages which coincide with completion stages of the build (eg completion of the foundations). There are two main types of stage payment, the difference between them being in the timing of the stage payments.

  • Arrears-Based Mortgage
    With arrears based payments, you will receive the stage payment after the stage is completed. This is safer for the lender but may cause you cash flow difficulties unless you have sufficient funds of your own.


  • Advance Stage Payment Scheme
    With the Advance Stage scheme you receive your stage payment before you commence a stage. Due to the added risk to the lender, this type of mortgage is usually more expensive.


    • Most lenders offer the arrears based scheme although an increasing number now offer the advance payment scheme. If you have sufficient personal funds and/or a very understanding builder, you will generally find it cheaper to go for the arrears method as it should be cheaper.

    How much can I Borrow
    The amount you can borrow for your self build will vary from lender to lender. Some will only allow you to borrow for the build itself, others will offer a mortgage for both the building plot and the build. You can borrow as much as 95% of the cost of the land and build with some lenders, although many will not lend more than 75%. Remember that if you borrow a high percentage of the cost, it is likely that you will have to pay a higher interest rate.

    Mortgage Requirements and Restrictions
    Each lender will have some restrictions on the mortgage. These may include the following:
  • Sufficient Income for 2 mortgages
    If you intend to keep your existing mortgage, your lender will want to ensure that you have sufficient income to pay two mortgages.
  • Some lenders will insist that all the building work is done by professional builders/contractors.
  • Some lenders will restrict the types of the materials you can use in your build so that your house is easy to re-sell.
  • Lenders will usually insist that the self build is detached and is for owner occupation.
  • Lenders will insist that the land has a minimun amount of planning consent remaining, for example two years.
  • Lenders will insist that appropriate insurance is in place during the building work itself and that an appropriate warranty is obtained at the end of the build.


    • Mortgage Providers
    There are approximately 30 providers of self build mortgages in the UK (link to list of these at bottom of this page). Some of these providers only deal with the self build market, but the majority are high street lenders. A few of the providers only deal with a niche of the self build market, such as lenders focused on green self build.

    Types of Mortgage
    Remember even with self build mortgages you are not necessarily limited to the conventional variable rate mortgage. It should be possible to locate fixed rate, tracker and self certification mortgages.

    Other funding options
    Not everyone wants, or needs a mortgage. You may be able to fund your build in other, cheaper ways. For example, if you already own a house with substantial equity, it may be cheaper to re-mortgage your house with a larger loan and use this to fund your self build. A re-mortgage on an existing property should always work out cheaper than a self build mortgage. You may also wish to consider selling your existing property and moving into rented accommodation or a caravan on site.
    Self Build: Further Information: Mortgages
    Do you have any questions about self build mortgages?ebuild forums: mortgages
    List of UK self build mortgage providersMortgage Providers
    Self Build Guide
    Index: Self Build Guide
  • Introduction
  • Finding a Building Plot
  • Evaluating a Building Plot
  • Self Build Mortgages
  • Construction Options
  • Self Build Design Options
  • Planning Permission
  • Building Regulations
  • Self Build Insurance
  • Self Build Warranties
  • Self Build VAT
  • Information Sources
  • Miscellaneous
    • If you can suggest any improvements to this section on self build mortgages, please contact ebuild with your suggested amendments.
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