MONEY MATTERS

Your home is a big investment, and unless you are sitting on a pile of cash, then you will need to take out a mortgage loan. No matter which way you go, it’s important to start early, because it can take four to five weeks for the approval process. And always add a 10-15 per cent contingency to your budget for overruns.

There are different types of loans available, depending on whether you are self-building or renovating, so let’s break them down.

Mortgage experts Hanley Economic Building Society can help you - visit www.thehanley.co.uk

Self build mortgage

Assuming you already own a plot and have planning permission, your next step is a specific self-build home loan. These are more rare and harder to get than traditional mortgages, so you may have to shop around.

You will need to have detailed plans, permissions and budgets in place to show the lender, as well as risk assessments and contingency plans. They will usually only lend if a professional architect or consultant is heading up the build. You may also need to show that you have enough funds to have somewhere else to live in the meantime, even if it’s in a caravan on site. And last, but not least, you will need a good deposit saved up- Money Supermarket suggests at least 25 per cent.

The funds for this type of loan are generally released in instalments, as the building stages are completed. Some loan companies will release funds in advance of each building stage, but others will reimburse you after you fork out for the work first. Your lender may keep a percentage of your loan total until the house is signed off as complete.

If all other avenues are explored to no avail, you could apply for the Self-Build Loan Fund from The Communities Housing Trust. Up to £175,000 is available and can be used in conjunction with the Croft House Grant Scheme. Apply before 31 August 2025. Check out www.chtrust.co.uk

Renovation mortgage

According to data from Together, almost one in ten, or 9% of UK homeowners plan on making home renovations this year instead of moving, due to rising living costs. A renovation mortgage enables you to borrow money against the value of your property to pay for house upgrades. These might range from minor structural adjustments to cosmetic alterations. Interest rates on mortgages for renovations are often higher than those on regular mortgages. This is because by lending you money to enhance your house, the lender is taking on greater risk. You should also expect to put down payment of 25 per cent for a renovation mortgage.

Remortgaging or refinancing your existing home loan for renovation is taking advantage of the equity you have built up in your home, which is the difference between the market worth of your house today and the balance owed on your mortgage. The size of that difference will determine how much you can borrow. Adding the cost of home improvements to your mortgage can be cheaper than other forms of finance such as a personal loan or maxing out your credit cards.

According to Checkatrade, these are ballpark figures to expect for some home improvements in 2023:

• Three bedroom house total renovation: £76,900- £138,800

• New kitchen: £17,500/Extension: £19,500

• New heating system: £5,500

• New windows: £4,250

Your home is probably the biggest investment you will ever make. So unless you are an expert or the project is very simple, the first stop in a self-build or renovation should be a chartered architect (CA). When you hire a CA, you’re getting at least seven years of education and experience- and not just on drawing schematics. The CA will guide you through all the steps, from initial concept and planning permission to financing and grants, to helping you pick the best contractors. They can get you started with permits and advice, or take you all the way through the process, managing every last detail, down to the budget.

As they say on the designing shows, good architects will more than pay for themselves. At the very least, you will save money and time on amateur mistakes. Find the right CA match to your project on websites such as the Royal Institute of British Architects, which is free to use.

How much should I budget for an architect?

Usually, the architect’s fees are calculated based on a set percentage of the final cost of construction. This can range from 10 per cent right up to 25 per cent depending on the type and scale of the project. Final cost includes not just the build, but ‘soft’ costs such as fees and testing. Plan for about 25 per cent of your total budget for these types of expenses.

Once you see how involved the phases of construction are, you will appreciate the help of a good architect. The main steps for your architectural design project include:

Schematic Design