First Time Buyer Self-Build Mortgage
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First Time Buyer Self-Build Mortgage
Paul Collinson talks about how the self-build mortgage process works if you are a First Time Buyer.
Can a First Time Buyer get a mortgage for self-build property?
Yes, you can get a mortgage for a self-build property as a First Time Buyer. It’s just that there are fewer lenders than for a traditional purchase mortgage.
Is it harder to get a mortgage for a self-build as a First Time Buyer?
Yes, it is, because a larger deposit is required. You will also need a good credit history, planning permission and a projection of costs together with the time it will take to complete.
What are the different types of mortgages for a self-build?
There are two different types. The first is to have the mortgage in arrears. This is the most popular option, where part payments are handed out from the lender at each stage of the build.
The second type is in advance – where the payments are made at the beginning of each stage and the money is available straight away to pay tradesmen for the work. That avoids the bridging loan option.
What is the interest rate for a mortgage on a self-built home?
Rates on self-build mortgages are typically higher than those for standard residential mortgages – mainly because fewer lenders are available. They can be one or two percent higher than standard mortgages, and most of them are interest only.
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How much deposit do I need for a mortgage on a self-build? How much can I borrow?
The deposit needed is generally between 25% and 40%. In terms of the borrowing, it’s similar to a standard mortgage in that we would look at your income and your commitments and any dependents you have – such as children. Based on that we would calculate the maximum borrowing.
Which banks offer mortgages to First Time Buyers for a self-build property? Are there many?
Yes, there are a few of them. The main ones people will have heard of are Halifax and Lloyds. Then there’s AIB, which is a bank in Northern Ireland, Ecology Building Society – for specialist green projects – Scottish Building Society, Build Loan and Build Store, who offer a service to find the land and planning, et cetera, on top of um the mortgage.
What are the benefits and risks of building a home and applying for a mortgage as a First Time Buyer?
The main positives really are that you can customise everything from scratch. Everything can be exactly as you want it in the property. New build homes also normally have higher energy efficiency, and obviously everything in there is brand new.
While that can be wonderful, it’s a lot of effort. There’s a lot of time involved and almost always the project ends up costing more than originally thought. That’s true with any build.
How can a mortgage broker help? Have you got any final thoughts?
We can help you right from the start. We can look at all the options, whether you are certain you want to self-build or consider the other avenues with mortgages and properties. We’ll guide you right from day one all the way through to completion, so that you’re comfortable with what’s happening all through the process.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
Useful Links
- First Time Buyers
- Agreement in Principle
- First Time Buyer Joint Mortgage
- Self-Employed Mortgage First Time Buyer
- First Time Buyer New Build Mortgage
- Joint Borrower Sole Proprietor
- Gifted Deposit Mortgage
- How much deposit do you need for a mortgage?
- Shared Ownership Mortgage
- Do I Need a Guarantor?
- What options do I have if I have a low deposit?
- Interest-Only Mortgage for First Time Buyer
- First Time Buyer Self-Build Mortgage