There is no one-size-fits-all solution

28 March 2018 Rachel Pyne | BuildStore

There’s no one size fits all solution when it comes to funding a self build. With a number of borrowing options available, the right one for you depends on your individual financial circumstances and project requirements.

The most successful self build projects are those that have been planned well from the start and this means knowing your budget and understanding your borrowing options early on. Rachel Pyne from BuildStore explains more.

House in hand
Self Build Mortgages

A self build mortgage differs from a standard house purchase mortgage because the money is released in stages as the build progresses, rather than as a single amount.

BuildStore has developed two mortgage packages specifically for self builders. They are defined by when funds are released during the build, either in arrears or advance and are tailored to suit both your income and the stages of your project.

It’s possible to borrow up to 95% of your plot and build costs with BuildStore, and if you already own your plot, it may be possible to borrow up to 100% of your build costs.

The Accelerator mortgage (exclusive to BuildStore) is ideally suited to timber frame projects as the money is released at the beginning, rather than the end of each build stage.

This is key as the timber frame supplier will need full payment before the structure is delivered onsite, which means you need the cash to pay for it upfront.

Around 75% of all self build mortgages are exclusively available through BuildStore with building societies leading the way as the main source of lending.

For many high street lenders, the idea of funding something that is yet to be built is something they won’t consider. Having said that, last year saw Virgin Money launch two mortgages exclusively with BuildStore for custom builders, the first high street lender to enter the sector.

More and more building societies are also starting to offer advance stage payments as well as arrears, exclusively through BuildStore. The most recent being Darlington Building Society, Mansfield and Furness.
Yellow pound symbol with red roof
There is a common misconception that it’s difficult to mortgage a timber frame or SIPS build system property however, this simply isn’t true. They are actually considered to be a standard construction method by lenders.

Lending criteria is more restrictive when it comes to the material used for the outer skin of the property, as this is what protects it from the elements and is key to its visual appeal.

Criteria does vary between lenders, so it’s always important to speak with an expert mortgage adviser before deciding on your construction method, to ensure that it’s mortgagable.
Potton_Case Study_Leese_Stone_Cottage

Browse our homes by build cost

You can browse a range of Potton homes and filter your search by design style and build cost. This should help you to get an idea about the size of home you could build for a given budget.

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Mini Build Story

First time builders Vicki & Antony McClafferty built a timber frame property to suit their lifestyle. It all started when they looked at some new build homes and realised they could build something bigger for the same price!

Using the Accelerator mortgage with BuildStore they received their mortgage funds in advance of each build stage which ensured the build ran smoothly and on time.

Project numbers
Plot cost - £80,000
Build costs - £196,686
Loan amount - £220,000
Property size - £188 sqm
Cost per square metre - £1046

Build Stage Build Costs Stage Payments*
Plot Purchase £80,000 £68,000
To complete foundations inc. timber frame £63,080 £53,618
To erect the timber frame £26,760 £22,746
To complete wind & watertight £20,919 £17,781
To complete 1st fix & plastering £45,430 £38,616
To complete the build £40,497 £19,239
Total £276,686 £220,000
The stage payment column shows the amount released by the mortgage lender to fund each stage of the build, including the plot purchase. The remainder of the cost is funded by the self builders own money.
pile of pound coins

Other borrowing options

A self build project doesn’t always equal a self build mortgage. There are other borrowing options available which might be more suited to you and choosing the right one can ensure that the journey to your new home is as smooth as possible. 

If you have enough equity in your current home or own it outright, you could remortgage or secure a bridging loan to pay for the plot, fund your build costs or both. Then when your new home is finished, you can sell your old one to pay off the loan.

This way you can stay in your current home during the build and avoid the upheaval of moving, living onsite or renting during the build.

When it comes to funding your self build, it’s important to speak with an expert mortgage adviser who can look at your financial circumstances and project requirements to recommend and tailor a borrowing solution to suit you and your new home.

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Eltisley Road

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