The main difference between a self build mortgage and a house purchase mortgage is that funding is released in stages as the build progresses, rather than as a single amount.
Every self build project has identifiable stages from the initial digging of the foundations to the final fix and at each stage the value of the build increases. The right funds need to be available at every stage of the build to pay for materials, tradesmen and specialist services.
This type of mortgage is known as a stage payment mortgage and there are two types, defined by when funds are released to your client - in arrears or in advance.
The BuildLoan Broker Desk will provide you the tools to review your client's individual situation and determine which lenders are best suited to their project requirements and circumstances, ensuring sufficient cash during their build and best advice.
The following chart shows the typical stages in a traditional brick and block construction and in a timber frame construction. With a stage payment mortgage, your client only pays interest on funds as they are drawn down rather than on the full loan amount.
|STAGE||BRICK & BLOCK||TIMBER FRAME||RENOVATION/CONVERSION|
|1||Purchase of Land||Purchase of Land||Purchase of Property|
|2||Preliminary costs & foundations||Preliminary costs & foundations||Preliminary costs & structural overhaul|
|3||Wall plate level||Timber frame kit erected||Wind & Watertight|
|4||Wind & Watertight||Wind & Watertight||Plastering & Services|
|5||First fix & Plastering||First fix & plastering||Second fix to completion|
|6||Second fix to completion||Second fix to completion|