Anyone can have a custom-build home: from first-time buyers to families and downsizers, there are options for every need and custom-build mortgages are readily available to finance the build.
While those who are downsizing may be able to finance their new home from the sale of their existing property or savings, many people need to arrange a mortgage.
However, when you are ordering a custom-build home (or self building) obtaining finance is not the same as getting a mortgage for an already completed home. Instead, you will need to arrange a specialist custom-build mortgage, which releases funds at specific stages of the build.
At Hugr, we work with trusted self-build mortgage lender Mayflower Mortgage And Finance, which is a specialist in the sector and, like us, is a member of the National Custom and Self Build Association (NaCSBA).
Custom-build mortgages are a complex area of finance. Being accepted for a self-build mortgage is, in fact, quite subjective and the offer will depend not just on the applicant, but the overall build project itself.
Custom-builders can usually borrow up to 75% of the cost of the land and 60% of the cost of the actual building. Typically, a 20-25% deposit is required against the whole scheme, although it can be possible to borrow up to 95%, depending on individual circumstances.
In 2021, the government also strengthened its support for custom and self-build homes by introducing the Help to Build Equity Loan scheme.
This enables buyers of custom or self-build homes to arrange an equity loan of between 5% and 20% (although up to 40% is available for London) of the estimated costs to buy the land, if that is required, and the cost of the build.
To apply for an equity loan, buyers need:
● deposit of at least 5% of the estimated land and build costs
● 95% self build mortgage from a lender registered with Help to Build based on the estimated costs.
Eligible borrowers can spend up to £600,000 on their new home, which includes land and build costs, with a maximum £400,000 for the build. This cost must exclude VAT and any contingency fund you may have.
This equity loan is interest free for the first five years, and a management fee of £1 per month is payable. From year six, interest and the management fee is payable.
Custom-build mortgages can seem a little daunting, which is why we happy to refer plot-buyers to Mayflower: it has exceptional experience and knowledge, which means it is always able to provide the very best advice and find the best and most competitive lenders.
Its website also has a handy toolbox to help plot buyers understand how the financing works and how they can access the mortgage they need to complete the building project.
You can get in touch with Mayflower directly, but if you are already talking to us about one of our development sites, we will be more than happy to introduce you.
We and our plot buyers have had excellent service from Mayflower. Most recently, we worked with it at Wellbank, in the Lake District National Park, which is one of our larger developments.
Together, we put together a panel of lenders that have already examined the development and in principle have approved lending on the site. This enables buyers there to speed up their mortgage application process.
Wellbank is also eligible for the Help to Build Equity Loan scheme.
If you are interested in finding out more about a custom-build Hugr Home, contact our friendly team today, email: email@example.com or telephone: 07540 754153.