Financing a Self Build

There are a wide variety of lenders prepared to offer mortgage funding and finance for self build projects. It is wise to obtain a range of quotes and see which one is most suitable for your project and your requirements. Check carefully about the availability of stage payments, and at what points these can be collected - this can be critical for your cash flow. You need to ensure that you have sufficient funding available to complete the stage requirements. Check what, if any, arrangement fees are charged.

Mortgage offers vary. There are stage payment schemes that work in arrears, typically in stages: after foundations, at roof plate level, after internal walls and plastering, and finally on completion. With this type of scheme you are only paying interest on the part of the mortgage you have actually used. There are also schemes that stage pay in advance by taking into account the land value and advancing against this - these can be handy if finding liquid funds to start the building project and the move to first stage payment level is going to be a problem otherwise. With this type of scheme there may be a mortgage premium insurance charge, so check what this may be before committing yourself.

It is a good idea to obtain direct quotations from prime lenders like banks and building societies to ensure you get a good cross section of the market prices and offers to compare.

Paperwork

As the buyer of the property, you are responsible for completing the land transaction return and paying the Stamp Duty Land Tax. However, in practice, your solicitor or licensed conveyancer will usually handle this for you and send it to HMRC on your behalf.

Valuation Fees

Mortgage lenders will conduct a survey and valuation of your land for their own records and, even though they charge you for this you will normally find that this valuation is not passed on to you. You may therefore also wish to have an independent valuation carried out by a professional surveyor for your own use and purposes. Mortgage lenders will normally also charge you for each re-inspection and valuation as the different stage payment points are reached. As there can be quite large variations between different lender's charges, you should seek information about these before deciding whose mortgage offer may be most suitable.

Planning Fees

You should expect to pay fees for drawings and plans prepared by architects or other professionals. You will also have to pay the normal council charges for planning permission, and for building regulations approval and inspections. These costs can be obtained on request from the local council.

Mains Services

If you have purchased a plot of land that is not already connected for mains services like electricity, gas and water, you will need to budget for these to be provided. Depending on the distance to the nearest services these charges can be considerable, and we recommend you establish these early in your project planning by contacting the electricity, water and gas companies. They will have plans of where the nearest infrastructures exist and should be able to provide estimates of costs and the length of time to establish a connection (this can be considerable in some areas).

Insurances

It is important to ensure you are adequately insured. Self build insurance policies are available and can provide cover for:

Public Liability Insurance - This covers legal liability for claims made by any other person or body in respect of death, injury or loss arising from your building operations.

Employer's Liability Insurance - This is a legal requirement if you are employing anyone. This can also be a factor if any sub-contractor working for you has an accident on site where your duty to provide a safe working site could be called into question.

Contracts Works Insurance - Protects against losses through theft, vandalism, structural damage, fire, flood, storm damage, damage by delivery vehicles, etc.

Other insurance - You may also require special additional cover on occasions when any specialist services are being provided on site by third parties.

ProAktive Selfbuild developed the first UK self build insurance policy in 1984 and have been the industry leaders ever since. They are self build experts who are happy to discuss your self build project and insurance requirements.

If you are building a new structure, extending your home or converting or renovating something more unusual, they are able to provide guidance on the risks faced and how to protect them.

For a quotation you can access their website by clicking here.