Month: December 2019

Self build mortgages have been specifically designed to help facilitate the self builder in building their own home. Unlike a traditional mortgage where the funds are released in one lump sum upon sale completion, a self build mortgage is released at key stages of the build.

Some self build lenders will lend on the plot purchase too, but not all do. Rates of interest are typically higher than the standard house purchase/remortgage rates currently available, and the arrangement fees also vary from lender to lender. Once the property is habitable, some lenders permit the borrower to switch to a lower rate of interest.

In order to progress your application you’ll need to provide plans and a breakdown of the potential build cost. Use our Build Cost Calculator to find out what your dream home is likely to cost, but remember to add on the cost of your plot and a healthy contingency fund for any issues you may encounter.

This article will explain what you need to know about getting a self build mortgage — from the types of self build mortgage available, interest rates and how much you could borrow, to the documentation you will need and some of the latest self build mortgage deals available.

Which Type of Self Build Mortgage Should I Choose?

There are two types of self build mortgage available:

• the arrears type, where stage payments are given as each stage of the build is completed. The arrears-type self build mortgage is suitable for those who have a large cash injection of their own to put into the project.

• the advance type, where the stage payments are released at the start of each stage of the build. This means money is available at the point of need when labour and materials bills are due — removing the need for short-term borrowing/bridging loans to cover the shortfall. The obvious advantage here is that this type of product assists cash flow and is generally better suited to those who do not have large pots of savings to fund the build as it progresses. There are fewer lenders who offer this facility though; try BuildStore.

Some lending institutions lend on the land purchase or existing property and at key stages during and on completion of the build project.

This can vary from:

• 75-90% of the purchase price or valuation (whichever of the two is the lower)
• up to 80-90% of build costs
• up to 75% of the growth in value of your project at key stages during construction.

Some lending institutions do not lend on land, but they will lend during the build period.

Products available include:

• discount from standard variable rate of interest
• fixed rate of interest
• bank base rate tracker
• offset

Interest Rates on a Self Build Mortgage

Interest rates on a self build mortgage are higher than standard house purchase/remortgage rates and typically vary from 4-6% per annum. The arrangement fees also vary depending on the broker or lender. You may be tied into the lender for between one and three years, again lender and product dependent.

Once the property is habitable and this has been confirmed by a RICS’ qualified surveyor and issue of the building control completion certificate, some lenders permit the borrower to ‘switch’ to a lower rate of interest during the ‘tie-in period’ without incurring penalty interest.

How Much Can I Borrow with a Self Build Mortgage?

The amount you can borrow will depend on your unique financial circumstances — your income and outgoings (and any outstanding debts) will be used to establish how much you can borrow. Banks and building societies apply an affordability calculation to assess your borrowing limits.

Are These Mortgages Regulated?

Mortgages of this type are regulated by the Financial Conduct Authority.

What Should I Consider Before Applying for a Self Build Mortgage?

Where Are You Going to Live During the Works?

Where you intend to live while you build will have an impact on your affordability to borrow monies to build your dream home. For instance, the monthly rental payments or mortgage payments will have an impact on your affordability calculation.

Some lenders will accept you making upfront rental payments, which will not have an impact on your monthly income versus expenditure.

What Build System Do You Plan to Use?

Some lending institutions will not lend on certain types of construction, so do ensure you check with them. Of course, all your design and construction methods will need to be compliant with the current Building Regulations.

Each lender’s criteria are different, but you do need to ensure they are aware of your build type and of the payment terms and conditions your supplier has stipulated.

Do not agree any payment schedule with your builder or suppliers until you know how your lender will release funds to you.

What’s Your Estimated Build Cost?

Some lenders require that you must work to a fixed build cost budget; others may request that a qualified quantity surveyor provides the information on the build costs. Check with your lender what they require. Also, ensure that you include a minimum of a 20% contingency built into your build cost estimate.

(MORE: Use our free build cost calculator to estimate your build costs)

In addition, as part of your full project costs and budget control estimate that you provide your lender with, you’ll need to identify (or at the very least estimate) the following costs:

• Land purchase and associated fees
• Project management, including health and safety compliance
• Gaining planning consent, if not already achieved, and associated fees
• Demolition and/or site preparation
• Construction design fees
• Construction costs (preferably estimated against Building Regulations drawings).

What Documentation Do I Need for a Self Build Mortgage?

The supporting documentation required is essentially the same as a standard mortgage. However, additional supporting documentation will be required, which may include:

• Copy of planning permission
• Copy of construction drawings and specifications
• Copy of total project cost estimate (where possible, fixed-price contracts)
• Copy of Building Regulations approval
• Copy of site insurance and structural warranty
• Architect’s professional indemnity cover (if required)
• SAP calculation (this will be in the Building Regulations package)
• Experian credit report.

An initial valuation will be carried out to establish current value and anticipated end value, too. You will be required to pay the valuation fees. Interim and final valuations will also be requested and carried out by a RICS valuer.

The reports will be presented to the lender to evidence the increase of the interim value(s) prior to interim and final release of funds from the lender. Again, you, the client, will pay the valuation fees.

Where Can I Get a Self Build Mortgage?

There are a number of companies who specialise in mortgages for this type of project.

Best Self Build Mortgage Deals – October 2019 

Lender	Contact	Max LTV on Land	Stage required for first payment	Max LTV during construction	Final LTV land and building
Beverley BS	01482 881510	Not on land	Negotiable	Max 75%	Negotiable
Buckinghamshire BS*	0345 223 4888	Max 85%	Land	Max 85%	Max 80%
Chorley BS*	0345 223 4888	Max 85%	Land	Max 85%	Max 80%
Cumberland BS	01228 403141	Max 75%	Negotiable	Max 75%	Max 85%
Darlington BS*	0345 223 4888	Max 70%	Land	Max 70%	Max 70%
Earl Shilton BS	01455 844422	Max 50%	Land	Max 75%	Max 75%
Ecology BS	0845 674 5566	Max 80%	Land	Max 80%	Max 80%
Halifax	0345 727 3747	Not on land	1st floor level	Max 80%	Max 80%
Hanley Economic BS▲	0345 223 4447	Max 75%	Land	Max 75%	Max 80%
Hanley Economic BS*	0345 223 4888	Max 85%	Land	Max 85%	Max 80%
Hanley Economic BS	01782 255000	Max 80%	Land	Max 80%	Max 80%
Ipswich BS	0845 230 8686	Max 75%	Negotiable	Max 75%	Max 80%
Loughborough BS	01509 631950	Max 80%	Land	Max 80%	Max 80%
Mansfield BS*▲	0345 223 4888	Max 85%	Land	Max 85%	Max 85%
Newbury BS	01635 555777	Max 66%	Land	Max 75%	Max 75%
Newcastle BS*	0345 223 4888	Max 85%	Land	Max 85%	Max 85%
Nottingham BS*	0345 223 4888	Max 75%	Land	Max 75%	Max 80%
Penrith BS	01768 863675	Max 50%	Land	Max 75%	Max 75%
Progressive BS	028 9024 4926	Not on land	Footings	Max 70%	Max 75%
Saffron BS	0800 072 1100	Max 80%	Negotiable	Max 80%	Max 80%
Scottish BS	0131 313 7700	Max 60%	Land	Max 80%	Max 80%
Stafford Railway BS*	0345 223 4888	Max 85%	Land	Max 85%	Max 75%
The Melton BS	01664 414141	Max 85%	Land	Max 85%	Max 75%
Ulster Bank	www.ulsterbank.com	Not on land	1st floor level	Max 80%	Max 80%
Vernon BS	0161 429 6262	Max 75%	Land	Max 75%	Max 80%
West Brom BS▲	0345 223 4447	Max 85%	Land	Max 80%	Max 75%

Notes

▲ via Intermediaries through BuildLoan.* through Buildstore Financial Services. Royal Bank of Scotland offers finance via a bridging loan facility. Ecology BS will lend on ecologically-designed houses only. Restricted lending areas may apply. Figures compiled on 30 October 2019. Source: Moneyfacts.co.uk

When Are Funds Released?

Funds are typically released as following:

Self Build

• Land (with the minimum of outline planning consent)
• Substructure
• Wallplate/eaves height (just before the roof trusses go on)
• Wind and watertight roof tiled
• First fix
• Second fix
• Certified completion

Renovation or Conversion

• Purchase of existing structure
• Inspected completion of structural survey and cost estimate of necessary works
• Completion of load bearing elements
• First fix
• Second fix
• Certified completion

Custom Build or Group Self Build

• Purchase of land
• Associated preliminary costs and substructure
• Construction to wind and watertight stage
• First fix
• Second fix and completion

---

Site Insurance and Structural Warranties

A bank or building society may not release initial funds until you can demonstrate that you have a 10-year structural warranty policy in place. When taking out your warranty, it’s also a good time to ensure that you have the right site insurance policy in place to give you peace of mind should anything go wrong.

Such policies are offered by providers such as:

• Self Build Zone
• Q Assure Build
• Protek
• NHBC Solo
• Premier Guarantee
• LABC

Anyone undertaking a build project, whether borrowing or not, should have both in place prior to starting work on site.

Subject to affordability, banks and building societies are keen to lend on residential construction projects, providing you have carried out due diligence and engaged the appropriate team(s) to achieve the successful construction of your new home.

(MORE: Self build warranties).

By learning how to board a loft, you can not only drastically increase the storage potential of your loft, but also make it safer and more stable to move around in. This is especially useful if you are short of storage space in your home – the loft is often completely underused, so if you’re not planning on turning it into habitable space with a loft conversion, then adding loft boards and using it for effective storage can be a great solution.

Loft boards are fixed together relatively easily, but working withing the confines of the loft’s available space can make boarding a loft a tricky endeavour. Do heed the safety advice detailed below and only attempt the task if you are capable. If not, hire a professional.

If you want to board your loft, follow this step-by-step guide.

How to Board a Loft: Step-by-Step

Before you start:

• Don overalls, gloves and a dust mask for protection, and finish off with a pair of trainers to aid agility in the loft
• Set up a temporary work platform on a piece of board set across the ceiling joists — it is safer, and more comfortable, than trusting your balance

Step One: Measure Up

Measure the area you plan to board out (multiply the width of the loft by its length). Take measurements in metres, this makes it easier when you are buying boards.

The 1,220 x 320mm boards come in packs of three and cover 1.17m² per pack. The 2,400 x 600mm boards are sold separately and cover 1.44m² each. Always add a 20% contingency on top of your final square metre figure to allow for awkward cuts.

Before you buy the boards, check the edges for damage. The tongues-and-grooves are vulnerable to clumsy handling, so be very picky when choosing.

Step Two: Assess the Insulation

Before you start laying boards, check the depth of your insulation. Building Regulations guidelines recommend a minimum 270mm thickness of insulation blanket. But joists are usually no more than 100mm deep, so this would be impossible to achieve and still put a floor on top. Furthermore, squashing insulation down to fit joist height is a bad idea as this halves it’s effectiveness — doubling your heat loss.

The best solution is to build a raised loft floor above the insulation (details of which are shown below). You can still board directly on to the joists if you want, but it is worth noting that this would not pass a building control inspection, because you wouldn’t have the full 270mm depth of insulation required by regulations. Whatever you do, make sure you put as much insulation beneath the boards as possible.

(Do note that if you board directly on to the joists, you run the risk of causing interstitial condensation. This is where moisture condenses on the underside of the boards and drips down, causing damp. To avoid this you need to raise the boards up and permit a flow of air between the insulation and the boards. Only board directly on to the joists if you know there is no risk of condensation forming in your loft).

Step Three: Lay the First Board

If you intend to board directly on to the joists instead of having a raise floor, then start by placing the first board across the joists.

If the board overhangs mark it at the centre of the last joist it crosses and make a straight cut at this point with a jigsaw. This allows the board that will butt up to its end to be supported by the joist.

Step Four: Stagger the Joins

For maximum strength the boards must be laid in a staggered pattern, in such a way that neighbouring joins do not line up. Lay a full board next to the first one and then mark or measure if it needs to be cut (SEE STEP 3).

Step Five: Fix in Place

Cut the second board (if necessary) and slide it into position with the first board, making sure the tongue-and-groove is fully connected to form an almost invisible join. Fix with two or three screws along the join.

Step Six: Fill in the Gaps

Measure, cut and fit infill pieces as you go to complete the run of boards. Slide them into position with gloved hands (the cut edges can be sharp).

Lay a block of wood along the outer edge of the board and tap it with a hammer if the tongue-and-groove connection creates too much resistance. This method prevents damage to the vulnerable board edges.

Things to note Rather than having a run of uniform ceiling joists to attach to, older houses may have a mixture of old roof joists and joists put up to support a more modern ceiling. This can create a riot of different levels and cause problems with fixing boards. If this is the case, it may save time and make sense to go down the raised floor route instead. Wiring in the loft often takes the most direct route from source to outlet. This means there could be wires strewn directly where you plan to lay a board. If there is enough slack in the wire, the joist can be notched and the wire run beneath the board. If you decide to do this, mark the position of the wire clearly on top of the board and make absolutely sure that you are not trapping the wire before you fix it down. A better alternative is to fix the wire with clips where it can be seen. If there is no slack at all in the cable then you may find that you have to disconnect the wire at its source before lengthening it using a junction box and some extra wire. You are likely to come across the tops of light fittings while you are installing your loft boards. You can cut the panel to make access to the light easy and make a removable infill panel if the light falls mid-board. Be aware that recessed spotlights generate a lot of heat, so make sure that any additional insulation material you have fitted is pulled well away from these fittings to prevent a fire hazard. However, doing this will reduce the insulating properties and counteract any efforts to limit heat loss. It is now common practice to fit heat diffusers, or completely seal the area around the light fitting.

Save

Electricians are the friendliest tradespeople in the UK, as voted for by 75% of respondents in a new survey.

Tradespeople can play a significant role in a self build or renovation, but taking on a tradesperson for the first time can always be a gamble, at least in terms of how friendly they are. 

My Job Quote surveyed 1,482 Brits to determine who they believed to be the friendliest tradespeople and which attributes they appreciated in the people they hired. 

Electricians were reported to be the friendliest, gaining three-quarters of the vote, while gardeners/garden designers were voted as being friendly by 71% of respondents. Plumbers also emerged positively having been described as friendly by 68%.

It’s not good news for tilers though. Only 23% of respondents categorised tilers as friendly, while only 29% considered kitchen specialists received the ‘friendly’ vote.  

The Importance of Trust

Manners and behaviour can often leave a lasting impression, and the efforts of tradespeople to be courteous and conscientious were reflected in these results.

A sizeable 79% said they valued tradespeople who provided them with a valid reason and apology for not turning up having arranged a time. 

Additionally, 84% said they appreciated tradespeople who did not get annoyed when they asked for an update on how the project was going. 

Self build and renovation can be a messy job, and 72% reported valuing tradespeople who took the time and initiative to clean up any mess they had created upon completion. 

(MORE: The Complete Guide to Renovating a House)

Carl Meredith, managing director of My Job Quote, said: “When hiring a tradesperson, Brits want to feel reassured that they are trusting someone who gets the job done properly and efficiently. A crucial part of the service that really matters to Brits is the level of care and attention that a tradesperson will provide them. 

“Brits want to deal with someone they can easily communicate and work with – friendliness is a vital characteristic when assessing and hiring a tradesperson.” 

Having built one oak framed home using Border Oak for the design and construction of the frame, Wendy and Steve decided it was time to move on to the next. “We had recovered from our last self build and got the ‘itch’ again,” explains Wendy. “I was pregnant with our second child and we had outgrown the house.

“We began to put out the feelers for land and the stars just seemed to align. We came across this site and I remember looking at it and saying ‘this is too good to be true’ — it was like a ready-made plot.”

Before it was purchased by Border Oak, the plot was part of the land behind the original landowner’s cottage, and was overgrown and full of trees. “Buying it from Border Oak saved on the stress of planning as a design for a barn-style house on the plot had already been approved when we bought it,” explains Wendy. “The design ticked all the boxes — we did move the position of a few doors and walls internally, but externally everything has stayed the same.”

Wendy and Steve knew that they would benefit from an open-plan layout, so several of the amendments that they made to the original plans involved moving walls and repositioning rooms in order to create an easy flow for their family life.

A Customised Approach

The design for the new house featured softwood timber weatherboarding and traditional clay roof tiles externally. Due to the slightly sloping nature of the site, there is a small step up to the front door.

“We noticed when groundworks began that all of us would congregate at the front of the house as this is where the sun really hits,” explains Wendy. “We decided to create a front veranda because of this — plus any time you can fit in somewhere to de-mud boots in England is a bonus!”

Internally, spaces are largely open plan on the ground floor. The single-storey garage section at the front of the house is a later addition, designed by Steve and Wendy and built by Steve and his father. This space consists of a fourth bedroom, accessed via the utility room in the main house, a workshop space with external doors, and a fifth bedroom annexe, accessed via loft steps.

The Hunters moved out of their old house and into rented accommodation during the build.

“We liked that Border Oak let you take on as much or as little of the work as you want,” says Wendy. “They constructed the watertight shell, including oak frame, SIPs, weatherboarding, roofing, most of the carpentry, doors, windows, and driveway. We did some of the groundworks, all the baseworks, brickwork, drainage, part of the first fix carpentry, and the landscaping. Thankfully Steve is no stranger to a building site and his Dad worked in the trade for over 40 years.”

“We also took on the internal fit out, except the electrics, plumbing and drylining which were carried out by Border Oak approved contractors. Steve would finish work and go to the house to carry on into the night. At weekends we went as a family — taking fish and chips to Steve in the evenings.”

Designing to Suit Style and Budget

At the centre of the ground floor layout lies the entrance hall and staircase, with a flexible study/playroom located behind the stair wall. To one side of the hallway lies a large kitchen diner that opens out to the garden through French doors, while to the other is the living room. All of these spaces flow into one another, thanks to an absence of doors and the inclusion of partial walls.

The oak frame has been left exposed throughout the ground floor, lending character and charm to the spaces, while on the first floor only the rafters are on show in order to make furniture placement simpler.

“We always have a conservative budget when it comes to interiors,” says Wendy. “I never forgo quality pieces that get a lot of use, but I make small compromises elsewhere to even out the finances.

“It’s so satisfying knowing that not only does your hard work and considered choices allow you to live in a bespoke home that you love, but also one that has allowed you to build equity in from the start.”

Among the many things the Hunters love about their new home is how energy efficient it is. While they have underfloor heating throughout the ground floor, there are no radiators at all upstairs. “The house is so thermally efficient,” says Wendy. “We never touch the thermostat — the house is always at an even, comfortable temperature.”

The entire build, including land and landscaping, came in at £400k — a hugely impressive achievement and one that shows what can be accomplished through a combination of thorough research and canny decision making, as well as a considerable amount of elbow grease.

“We are a family who is not afraid to get stuck in,” says Wendy, who found herself in the dead of winter with no heating, helping paint the entire interior walls of the house day after day.

“Self-building is one of the hardest things you can do, but the sense of achievement at the finish line is so rewarding. We got to spend time as a family coming together, literally getting our hands dirty, for one common goal. We will always look back on these times with the fondest of memories,” says Wendy.

“After each build, you are so exhausted that you need to come up for air for a while, but after about a year we feel our strength coming back to us, and we start to crave yet another project. We shall see what lies ahead and if the stars align for us again!”

Two in five Brits can’t afford to buy a house in their hometown, according to new research.

The findings from Good Move, which surveyed 2,000 UK adults, also revealed that 18-24 years olds are the least confident that they’ll ever be able to afford property in the area they grew up.

On average, Brits want to live 21 miles away from their parents, but this is least achievable for people born in Cardiff and Norwich.

Over half of people who grew up in Cardiff think that local houses are outside of their financial reach, while 43% reported being unable to afford a house in Norwich.

Those born in Sheffield and Bristol feel that they have the best chance of being able to buy a home in their city, with only 26% and 28% believing this isn’t possible. 

A Change is Needed

The stark reality for many young adults is that affordable housing is stagnating, and the Conservative Party has been unable to achieve its target of building 300,000 new homes per year. 

In August this year, housing secretary Robert Jenrick revealed that the government was considering a scheme to give first-time buyers a 20% discount if they purchase property in the area where they grew up. This, however, was not elaborated upon in the Conservatives’ pre-2019 General Election manifesto. 

With nearly two in five (37%) respondents reporting being unlikely to ever be able to afford to buy a house in their hometown, the research indicates that such an initiative would be most welcomed. 

Self and custom build offers young adults a more financially attractive route into moving into a new home. Self builders typically enjoy a profit of 25% on their investment, as reported in the Homebuilding & Renovating Self & Custom Build Market Report 2017, and homes can be self built to be more environmentally (and financially) sustainable in the long term.

(MORE: Self Build: The Complete Guide)

The 10 cities where people are most unlikely to be able to afford to buy property in their childhood area, via Good Move, are:

1) Cardiff	51%
2) Norwich	43%
3) Belfast	41%
4) Nottingham	40%
5) Manchester	38%
= Southampton	38%
= London	38%
8) Liverpool	37%
9) Leeds	34%
= Newcastle	34%