Mortgages & Home Finance Self Build Mortgages: The Guide

Date Published:

30/09/2008

All you need to know about self build mortgages if you're planning to build your own home.

By Sarah Jagger

Why Build Your Own Home?

Some 20,000 people now build their own home each year, says Norwich & Peterborough Building Society. And with good reason – you get a property designed entirely around your needs in your chosen area, and in many cases, you can save up to a third of the price of a ready-built property.

How Much Can You Borrow?

The good news is if you can afford to buy a house, it’s likely a lender will agree a self build mortgage. How much you can afford to splash out on your new home will be restricted by the amount of money you can borrow.

Self build lenders use the same income multiples as for traditional mortgages, so you can typically borrow up to four times a couple’s joint income or five times a single borrower’s income.

Applying For A Self Build Mortgage

But getting a self build mortgage is more complicated and involves more paperwork than a traditional mortgage.

‘A lender will want to see the plans for the property and the projected building cost,’ says Louise Cummings, head of mortgages at moneysupermarket.com.

You’ll also need to have the appropriate planning permissions in place. ‘At the very least, you’ll need outline planning permission but most lenders will expect you to have full planning consent. This shows to the lender that the plans have been submitted and agreed by the local planning authority for the building of a specific size and type of house,’ says Cummings.

Find out more about applying for planning permission at the government’s planning portal.

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