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.
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.
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.
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.
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
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
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.