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Self-Build Mortgages

A brick building under construction with scaffolding surrounding it, and the text “SELF BUILDS” prominently displayed at the top

How to Get a Mortgage for Your Dream Home Project 

Ever dreamed of constructing your dream home to your exact specifications? A self-build mortgage might be just what you need. This unique loan supports the creation of your personal abode. 🙌

Let’s delve into self-build mortgages, outlining their advantages and potential hurdles, and guide you through obtaining one.


Image showing a self build mortgage application form

Understanding Self-Build Mortgages 

Unlike typical mortgages for buying homes, self-build mortgages release funds in stages, coinciding with construction milestones. This staged funding minimizes lender risk and ensures money is used appropriately. 

Self-build mortgages come in two flavors: arrears and advance. Arrears mortgages provide funds post-construction stages, necessitating initial capital for groundwork and land purchase.

Advance mortgages offer funds at each stage’s start, aiding cash flow and reducing short-term loan needs. However, they’re rarer and might carry higher rates and fees. 

Expect higher interest rates for self-build mortgages compared to standard ones, along with variable arrangement fees. Additional costs like valuation, survey, legal, and insurance fees may also apply. 


Advantages of Self-Build Mortgages 

Despite the extra costs and complexity, self-build mortgages offer compelling benefits:

  • Pay less stamp duty, as it’s levied only on land value, not construction or final property value.
  • Design your home to your taste, meeting your needs and lifestyle.
  • Construct a home with superior quality, energy efficiency, and sustainability compared to existing houses.
  • Enhance your property’s value, often exceeding construction costs.


The image portrays a modern two-story home with a combination of white and wooden exterior.

Applying for a Self-Build Mortgage 

Follow these steps:
  • Research and calculate your home’s building cost, including land, materials, labor, and other expenses, using online tools for budget estimation.
  • Seek land with the necessary planning permission for your property type. Explore online listings or consult local real estate or land agents.
  • Choose a reliable builder or contractor who can execute your project within your budget and specifications. Seek recommendations from those with similar experiences.
  • Compare lenders, their offerings, rates, fees, and terms. Utilize comparison sites or engage a mortgage broker specialising in self-build loans for quick principle decisions and mortgage protection reviews.
  • Assemble your application with all necessary documents, such as plans, budget, income proof, credit report, deposit evidence, and employment contract.
  • Await the lender’s verdict and proceed if the terms are agreeable. The lender will disburse funds in sync with your construction progress.


The image depicts a red, humanoid figure stepping up on a series of grey steps labeled “CHALLENGE” in bold capital letters.Challenges in Acquiring a Self-Build Mortgage 

Securing a self-build mortgage can be tough, with challenges like:

  • Stricter lender criteria, requiring solid proof of income, credit history, and affordability.
  • Difficulty in finding suitable, permitted land.
  • Managing cash flow and budget amidst construction delays or unforeseen expenses.
  • Addressing construction issues, from adverse weather to material defects or unreliable contractors.


The image depicts the handwriting of the word “CONCLUSION” with a white marker on a blue background


 A self-build mortgage offers a fulfilling path to crafting your perfect home, but it’s not without its challenges and risks. Thorough research, meticulous planning, and expert advice are crucial before embarking on this venture. 

Consider working with a specialist mortgage broker who will help unlock better mortgage deals tailored to your unique situation, this will save you time and money. Whether you’re exploring better mortgage deals or seeking a quick decision in principle, reach out to West Wales Money today!

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