Anyone have any self build mortgage experience?

[CatherineParr1986]

We are currently getting together some architect sketches for our new build and going to get some quotes from builders when they are done. I think at that stage we can look at a self build mortgage. Just wondered if anyone had had one and could share any experiences? Did it take a long time to setup? Did they lend more/less than a standard mortgage? How much contingency did you need on top of builders quote? What were the fees like? Anything else I should be aware of?

We have just had ours approved and are hoping to get our first payment soon. I think it's standard that they will lend up to 75% of what the finished house is valued at, so you'll need to have funds for the rest and to purchase the site if you haven't already done so.

Our money will be released in 4 stages so you need to get a sign off at those stages for the bank to release the next payment. The final payment is on completion so you need to think about cash flow if you're using that money to pay trades/kitchens/bathrooms etc as they'll want to be paid before you get to that stage.

The price of materials is going up and up at the moment so definitely factor in a decent contingency if you can.

The process has been long for us because DH lost his job due to COVID, but that would have been an issue with a normal mortgage too.

Building is definitely stressful, but hopefully will be worth it!

Hey, thanks for posting! That’s exciting, when will you start and how long do you expect it to take. I know I’m really worried about prices going up that it will become unaffordable for us. We won’t know unless we try though!
We already own the land, we have a small mortgage but enough savings to pay it off. I have spoken to a mortgage broker who will advise us on what is best. Value of the house at the end will be considerably more than we could ever afford to borrow so that shouldn’t be an issue.
I was wondering did the bank tell you how much contingency you should have before they would lend to you, or was it left to you to decide? Also who signs off each stage, is that the builder and do you pay for that and pay to have the funds released?

@CatherineParr1986 we started building about 6 months ago and have used our own funds to get to this stage, we're nearly ready to put the roof on, and that's when we'll get our first mortgage payment. Yes, each stage needs signed off, I'm sure the bank stipulates who can sign it off, not sure if the exact details. We have an architect friend who is doing it for us.

I don't think the bank asked us to have any specific contingency, but they obviously check that you have enough funds to fibrils the house in conjunction with the mortgage. And the final cost depends so much on how much you're spending on kitchen and bathrooms etc. You could spend £5k or £50k on a kitchen depending on what you go for!

*finish. Not fibrils!

We finished our self build late last year! The mortgage was a massive PITA to be honest - took a long time to set up, mainly as my OH has his own business so they made us jump through many hoops; every time we thought they had asked for the last bit of evidence/paperwork they would ask for something else. So something to be aware of if either of you are self employed or Ltd company. Then each draw down of the funds took ages, we had to raise a complaint at one point as they took so long it meant we couldn't pay suppliers; they upheld the complaint and gave us compensation but it was very stressful! Look carefully at the terms too - ours withheld 10% of total build cost until we had the final surveyor sign off, meant having to be careful about costs in the last couple of months to enable us to get to that point without running out of money. And as far as contingency, we had to submit a budget as part of the application which had to include a contingency amount. They never actually asked for any quotes/details to back up the budget though which was good, some of it we had pretty accurate figures for but some bits we had to base on google estimates. However, the build itself went great, despite a few delays from COVID. And if I was doing it all over again, I would be more organised with invoices for the VAT reclaim! A lot were sent through on email so had to trawl back through 1.5 years worth to try and get them all included, perfectly doable but took ages! Good luck, it was totally worth it!