Home buyers who want to build a property for themselves or investment purposes can find it a challenge to compare loans that will offer them the best deal as there are many variables. Lending for building a home a ‘self-build mortgage,’ and there are several different types of self-build mortgages available in the marketplace.
Differences between a Self Build Mortgage and a Traditional Mortgage
When comparing loans for self-builders, the differences between a self-build mortgage and a traditional mortgage first need to be understood. The main difference is that self-build mortgage money is released in stages as the building progresses, rather than as a single amount. The success of the loan application is not entirely dependent on financial circumstances, as with a traditional mortgage, but also on the quality and credibility of the presentation. Mortgage lenders will want to ensure the project is properly planned and produced by suitably qualified professionals. The broker will use the drawings to assess the value of your plot of land and the end-value of your self-build scheme. You will be required to provide a thorough cost analysis will be along with an itemized budget.
Important Factors to Consider When you Compare Flexible Loans
There isn’t an easy way to compare loans for a self-build mortgage because there are so many factors to consider, and what may be suitable for one home-builder may not be right for another. However, the important factors to consider when you compare mortgages for your build mortgage are:
What is the maximum loan-to-value (LTV) available?
Who will assess the valuation of the land and property? How much will it cost?
Are the staged payments made in advance or in arrears of each stage?
Will you need planning permission in a detailed or a summarized format as a condition of an advance loan?
Are there charges for multiple inspections and valuation surveys before funds are released?
Is the lender flexible if you have to alter the design of your self-build home?
Do you need a warranty or another type of structural insurance? Most lenders also require site insurance to protect against damage caused to the building during construction and theft of materials.
Are there any early termination/completion/redemption fees?
Can you manage you own construction or does the lender stipulate you must have an architect or a project manager for the build?
There are many variables with a self build mortgage and as there is no quick way to compare flexible loans for your needs, an independent mortgage broker can guide you to the right flexible loan for your needs.