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How to finance your self-build project

The prospect of building your own home is an exciting one. While many are drawn in by the flexibility of being able to design their dream home to their own tastes and requirements, others are drawn in by the potential to save money; with figures showing self-builds can generate savings of between 10% and 30% when compared to buying a similar property from a developer.

Although the opportunity is enticing, if you haven’t got the funds readily available, you might be wondering if you can afford to build your own home at all. Below, Richard Bousfield from The Surrey Mortgage Broker, explores one of the routes you could take to fund your self-build project.

Can I afford to build my own home? Your financing options explored:

There are many different ways to fund your self-build project. You may be lucky enough to have the funds readily available, or you might have to take out a loan. Alternatively, you could consider a self-build mortgage.

Much depends on your financial situation of course and alsoyour residential circumstances. All circumstances will vary but you may well be eligible for a self-build mortgage.

Self-build mortgages explained:

Essentially self-build mortgages are the same as normal mortgages. However, instead of funds being released in one go, money is released at various stages throughout the self-build process (e.g. when the foundations go down, when it’s watertight, etc).

The money is released in one of two ways. Either at the end of a completion milestone (arrears self-build mortgage) or at the start of a completion milestone (advance self-build mortgage).Therefore, it’s absolutely essential that you get the project planning spot on as you’ll need to make sure your funds will last you from one milestone to another. Consider enlisting the services of a firm like BWP Architects who can help you with the management of the project. See more here.

It’s trickier to secure a self-build mortgage than a standard mortgage, considering there are only around 12 lenders in the UK that offer this type of product. Typically, they’ll only loan up to 60% of the final valuation of the property where that doesn’t exceed 75% of the total cost of the build. Make sure you are fully aware of how much the build will cost, and how much your property will be worth once it’s finished to ensure you are eligible for a self-build mortgage.

Things to consider with a self-build mortgage:

Self-build mortgages come with their own set of rules, terms and restrictions. So, it’s important to consider the following before taking the leap:

Interest rates are usually higher than a standard mortgage
You’ll still face early repayment charges
Lenders will need to see project plans and details
The deposit amount can be between 25%-50%
Project planning is essential as money will be released in various stages and therefore you have to ensure your loan will see you through until the next instalment is paid

Getting started:

Building your own home isn’t a decision to rush into, and you must thoroughly consider your finance options before you take the leap. Do you have the large deposit required for a self-build mortgage? Will you be able to afford the hefty interest rates?

All routes of financing your project will have pros and cons and ultimately what works for you, will be different from the next person. If you want help exploring the possibility of a self-build mortgage, why not contact The Surrey Mortgage Broker who will be happy to offer advice based on your circumstances. They’ll be more than happy to offer you a no-obligation, free initial consultation to see if this route would work for you.

You can find out more about The Surrey Mortgage Broker by visiting, or you can contact Richard Bousfield on 01252 759 233 or

About the guest author:

Richard Bousfield, Managing Director of The Surrey Mortgage Broker, has been offering reliable and unbiased mortgage advice since 2003. Richard prides himself on giving jargon-free and plain-speaking mortgage advice and ensuring each application goes through as smoothly as possible. Richard ensures you have one less thing to worry about in the often stressful and complex scenario of buying a property.

Richard can offer advice on mortgages for first-time buyers, self-builders, house movers and remortgages. He can also offer advice on buy to let mortgages as well as help for those who have previously been turned down.

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