What is a custom build mortgage?
Custom and self-build mortgages are seen by lenders as carrying more risk as such they differ from standard mortgages in the following ways:
- Involve stage payments relating to set stages of the build. LABC Warranty is accepted by leading lenders for funding in this way, subject to approval
- This can be either at the end of stage, known as an arrears self-build mortgage or at the start of each stage, known as an advance self-build mortgage
- Interest rates are usually higher and may incur a penalty charge for early repayment
- Lenders will usually want to see detailed plans and a projection of costs
- The amount of deposit required is also higher, typically 25% but sometimes up to 50%
What do I need to apply?
In addition to all the documents and evidence you are expected to supply for a standard mortgage, a custom or self-build mortgage lender will also likely ask to see:
- Copy of planning permission
- Copy of detailed plans and total build cost projection
- Copy of building regulations approval, which you can get from your local authority building control
- Copy of site insurance and structural warranty, such as your LABC Warranty Certificate of Insurance
- Architect’s professional indemnity cover (if used)
- Credit report
Where can I get a custom build mortgage?
There are several lenders that offer custom/self-build mortgages with arrears or advance stage payment terms as described above.
Here is a list of the main providers. Please note that this is not an exhaustive list and inclusion here does not form any endorsement from LABC Warranty:
- Buckinghamshire Building Society
- Darlington Building Society
- Earl Shilton Building Society
- Ecology Building Society
- Furness Building Society
- Hanley Economic Building Society
- Hinckley & Rugby Building Society
- Ipswich Building Society
- Loughborough Building Society
- Melton Mowbray
- Newbury Building Society
- Penrith Building Society
- Progressive Building Society
- Saffron Building Society
- Scottish Building Society
- Stafford Railway Building Society
- West Brom Building Society
What other funding is available for custom builds?
At the time of writing, there is no central fund available for self-builders in England. However, an update is expected in 2021 on a long-proposed Help to Build funding scheme. More details when we get them!
In Wales, the Self Build Wales scheme provides loans for eligible self-builders from the Development Bank of Wales, repayable once the project is completed.
Hopefully this information has helped give you the foundations for embarking upon your custom build project. Good luck!