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Self Build Mortgages The main
difference between a self build mortgage and a house purchase
mortgage is that with a self build mortgage money is released in
stages as the build progresses rather than as a single amount.
Some lenders will lend you money to purchase land, typically 75%
of the purchase price or value, whichever is lowest.
After this, the money for the build is released in a series of
stages. These can be fixed or flexible depending on the lender but
usually there are five.
During the build you can
borrow typically 75% of the cost of the value of the house as the
project progresses, depending on the chosen lender.
There are two methods by which the money can be released during
the build – at the end of each stage or at the start of each
stage. (Known as arrears stage payments and advance stage payments
respectively.)
In the arrears stage payment
method, the money for that stage is released after the stage has
been completed and a valuer has visited the site. This can cause
some self builders to have cash flow difficulties.
The advance stage payment method was developed by specialists
BuildStore. With it the money required for that stage is released
at the start of the stage before work starts.
This
advance payment mortgage has become very popular as it gives
positive cash flow during the build and the high percentage
lending of 95% of the cost of the build makes it is easier to stay
in your current house while the build progresses.
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Self Build Mortgages 
