Raising finance

First build up your bank balance

Just as you cannot build a house without qualified professionals and skilled trades people, you won’t build up your money without expert help.

The good news about building your own home is that you almost certainly get more house for your money. The bad news is that at the start you need more money for your house.

To kick start their finances, and the entire project, many people sell their homes and live on-site in a static caravan; their old home is helping build their new one. A storage container on-site to store possessions will also keep costs down and both will have a resale value once the build is complete.

Remember that not all lenders will consider self-build mortgages and any who do, be they banks or building societies, often will only loan money on a fixed-price contract, or on an all-trades basis under the direction of a suitablyqualified project manager.

It is well worth your time to do a lot of initial research online so that you have plenty of ideas to discuss with your financial advisor.

Leading website, moneysavingexpert.com, advises that you use a mortgage comparison tool like theirs, or any others available, to see what is on offer for your situation.

Then use a broker to help match you with the best ones; this will include products exclusive to brokers who have access to special deals that are not directly available to customers. A broker is also clued up on which lenders are most likely to lend to you.

Make sure you check out the new wave of ‘eco’ building societies and ‘ethical finance’. With self-build designs having such great opportunities to incorporate energy saving systems you can now find premium financial products aimed at properties with sound ecological footprints.

If you find the finances daunting but still want to go down the self-build route, think about ‘package deals’ where you buy a kit house and building services from an existing company as they often offer, or source, financial packages. This can save a lot of leg work and grief. They might also have plots available as well.

Receiving the funds

Already got a property?

The deposit needed to buy a property is far smaller when compared with the initial lump sum a selfbuilder needs to buy the land and get the first stage completed on site before the mortgage kicks in and cash arrives to fund the next stage.

Buy an existing property and the mortgage arrives in a lump sum; build and the money will come in stages as work on the property progresses.

The self-build home buyer is always ‘in arrears’ though some ‘advance’ mortgages can be found where the cash arrives at the start of each stage of construction.

The self-build mortgage traditionally has six stages: • Land purchase • Preliminary costs and foundations • Wall plate level (brick and block) kit erected (timber frame) • Wind and watertight • First fix and plastering • Second fix and completion

If you are taking on a renovation, conversion or extending your existing property it pays to keep in mind that a self-build mortgage may also be the right way for you to raise cash. This is where that expert financial advice comes in so handy.