The dream of building your own home can now become a reality with our flexible Self Build Mortgage. Maybe you've already found the perfect plot of land and now you want to make sure that you've the right Self Build Mortgage to finance it?
A self build mortgage differs from a regular house purchase mortgage in that the money is released in stages as the build progresses, rather than in one single amount.
With a Scottish Building Society Self-Build Mortgage you can borrow up to 80% of the total cost of the land and construction costs or valuation, whichever is the lower, making the whole build process more flexible.
Save money, have it your way
You might think that you have to be well off to build your own home, but it’s perfectly possible for anyone to successfully fund a project. The combined cost of land purchase, materials and labour will generally be less than buying an equivalent pre-built property. Plus, you can build the house the exact way you want it!
Do your calculations
The best place to start is to work out your budget – normally the total of your savings, equity in your existing home and borrowing capacity. It’s easy to overspend on a self-build project, often as a result of a kitchen upgrade or unexpected costs. So it’s essential that you include a 10% minimum contingency fund within your budget. After that, the most important thing to consider is cash flow – will there be sufficient funds available to meet financial obligations?*
Ensure proper supervision
If a builder is carrying out the entire project and is registered with the National House Building Council you will benefit from an NHBC Buildmark Warranty. This is a 10-year residential warranty and insurance cover for newly built houses and conversions. You can check if your builder is registered with the NHBC at www.nhbc.co.uk If the home won’t be NHBC registered, you must employ an architect or an RICS qualified surveyor before the foundations are poured. They’ll need professional indemnity insurance to supervise the construction, and will need to provide the certification confirming the standard of construction. Without any of this documentation, future resale potential may be affected. The Society also insist that you employ a suitably qualified project manager to oversee the costs. This should prevent the costs of the build plus fixtures and fittings exceeding your original plan.
*Please note that the mortgage commitment must be affordable and if lending required is on maximum available it may be rejected.
Q. How much can I borrow?
A. A mortgage is a big financial commitment. As a responsible lender, we think carefully about the amount you can borrow and the mortgage terms that will work best for you.
We will carry out an assessment of your net income and outgoings to make sure the mortgage is affordable.
The first instalment can be made available when you purchase the land and can be up to 60% of the plot value or purchase price – whichever is lower. You then have the flexibility to negotiate instalments during the construction period, providing the outstanding loan is not more than 80% of the current valuation.
Q. How are funds released?
A. For a Self-Build Mortgage, funds are released in stages after each section of work is completed. The list below is a typical example of how this might happen, but we can be flexible depending on the type of build and your circumstances.
- Purchase of land (when full planning permission is in place)
- Foundations laid
- Up to eaves level
- Wind and watertight and roof tiled
- Interior walls completed (plastered out)
- Ready to move in
Q. Anything else I need to think about?
A. It’s essential you get specialist self-build insurance if you intend to build a new home, or renovate or convert a property intended for occupation on completion.
Building & Renovating Guide 2018
The Building & Renovating Guide from Homes & Interiors Scotland is a useful source of information if you are looking to build your own home. Click below to browse the guide. Copies are also available from our branches on request.