There is a growing interest in self-build homes, says Saffron Building Society, which has increased its mortgage lending in this type of property by 144% compared to this time last year.
In the UK, self-build homes only equate to 8% of new builds, compared with 60% in Germany – so we have a long way to go to catch up with other parts of the world.
At Saffron, the increase in self-build enquiries have come from a mix of first-time buyers, property conversions through to large, multi-plot projects.
A self-build project can save between 10-20% on the price of a home, according to the National Custom and Self Build Association (NaCSBA).
Most people have images of giant Grand Designs style builds – with Kevin Macleod popping by to film your progress. In reality, most self-builds are modest first homes, two to three-bedroom houses built on a pre-planned plot in a location desired by the self-builder.
But self-build does not have to mean “built from scratch”. Barn conversions, knock-down and rebuilds, loft or basement conversions or a large extension all constitute a self-build and can be mortgaged accordingly.
Colin Field, CEO of Saffron Building Society, commented: “We are delighted to see that the interest in self-build mortgages is on the increase. With the fluctuations in the market, it is a really feasible option for first-time buyers as a complete build will face too many financial changes – just material cost.
“Another positive is the amount of people upgrading current property stock. Bringing them in line with current regulations, extending them and making them habitable and then marketable should they choose to sell, great for the environment.”
How does a self-build mortgage works?
A self-build mortgage works slightly differently to typical mortgage products. The lender requires full planning permission, detailed architectural drawings, and a schedule of works and costings at application stage. The mortgage includes flexible stage payments assisting cashflow during the construction phase.
Field continued: “A self-build might seem a little daunting, especially for a first-time buyer. But, the structure of the lending is so flexible, releasing funds at pre-set stages of the development to assist with cashflow, it is a very supportive way to get on the market.
“It can be an exciting and rewarding path to your first home; or update, grow or improve your current home.”
Self-build mortgages from Saffron Building Society are only available from mortgage brokers. For information on ‘how easy it is to build your first home’, with links to other relevant organisation to offer support, Saffron Building Society has produced a helpful self-build guide.
