How to raise a mortgage to build a house
Building your own home can be a far most cost-effective means of finding somewhere to live in comparison with buying a residential property. Read on to find out how!
Look, we know that getting a more conventional, residential mortgage might appeal to you. However, the opportunity to build your own home and acquire a self-build mortgage can be just as fruitful! Building your own home can be tricky to fund unless you have a load of money in the form of savings or inheritance. But fear not readers! Over this article, we’re going to show you how you can get a self-build house mortgage for the house of your dreams!
What is a self-build mortgage?
Self-build mortgages are essentially what they say on the tin. It’s basically where you take out a mortgage to allow you to purchase land & build your new home. The main difference between this and a standard residential mortgage is that the money you receive from your lender will be given to you in instalments as opposed to one lump sum. For those of you wondering why this is, it’s basically to mitigate the risks that lending money on an unfinished project might bring. As well as this, the instalments can also ensure that the money for the property is spent to keep the project on track so that you do not run out of cash part way through.
Like most things involving mortgage lenders, this is going to vary depending on what one you have. This is no different for lenders when they’re deciding how much they should pay you per instalment. Despite this, you’ll generally receive payments when you first buy the land that you’re building and as the building begins to take shape.
Why should I get a self-build house mortgage?
One of the big draws of raising a mortgage to build a house is that you could save shedloads of cash by not having to pay stamp duty. While you will not have to pay stamp duty if you are a first-time buyer anyway, there is also no stamp duty on the cost of building work. You’ll only need to pay duty on the amount that you had paid for the building work if it exceeds £125,000.
This can reap huge financial awards. What happens for a lot of those who have built their own homes is that the actual value of the property far outweighs the amount it costs to construct. This can be a great move for your long-term finances!
How we can help:
Still unsure about how this all works? Well, don’t worry. This is where we come in! At Mortgages Online we can provide with a service that compares thousands of different mortgage deals from hundreds of different lenders to help you find the house mortgage which best suits your financial situation. All you have to do is look at some of the other articles on our site.