Finance is the solid rock against which your self build dreams can crash. But this guide will help you navigate the stormy waters and find the finance that you need. Let’s start with a quote from Superman himself (well, it’s Christopher Reeve actually!)
“So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable.”
Anyone who has built their own house will tell you that there’s a lot of will that needs summoning. And that you have to summon it time and time again. But they’ll also tell you that the effort is worth it. Yet, it’s not just an iron will that needs summoning. You’re also going to need finance to make your dreams come true.
Let’s take a look at how you can finance your self build dreams into reality.
Funding Your Self Build Project
Once you’ve budgeted for the land, labour and materials you’ll need you can, first of all, pat yourself on the back.
Congratulations: there’s no way you can buy a property off the market for this little. To make it happen, though, you are going to need to find the money for it. The fortunate few may be lucky enough to have savings that can cover their costs. One option for the rest of us is to consider selling our current home. But, having done this, you’re going to need to budget for rental accommodation (or find a very obliging friend with a large house).
There is another way, however, that you can leverage your house to raise the finance you need.
Secured loans, sometimes called homeowner loans, are offered against your property. This means that your home can be at risk if you cannot make the repayments. But it also means that you can borrow a large sum of money and pay it back over a long period of time.
Self Build Mortgages
There are also mortgages that are designed specifically for those building their own home.
Self build mortgages are very similar to conventional mortgages. They differ in the way they release money to you. Money is released in stages as your build progresses, as opposed to paying out a lump sum in order to purchase a property. This obviously means that you are only paying back interest and capital on smaller sums.
Self build mortgages are offered as fixed, variable, offset or discount mortgages, and there can be an option to remortgage your existing property too.
Typically, they are slightly more expensive to arrange than conventional mortgages. In the past these were available with a deposit as small as 5%, but these days you usually need around 20% deposit to qualify.
Government Scheme That Support Self Builds
Finally, there’s a government-backed scheme that can offer help financing your self build dream.
The £3 billion Home Building Fund amalgamates and extends two older finance schemes. It’s administered by the Homes and Communities Agency (HCA) and is aimed at small builders, community builders, custom builders and regeneration specialists in England.
Here is what the aims of the fund are set out as:
“We want to encourage innovation, both in the kind of homes that are built and the way they are delivered. Financing is available to support these projects which could include community led housing projects, serviced plots for custom and self-builders, off-site manufacturing, new entrants to the market and groups of small firms working in consortia to deliver larger sites.”
Make Your Self Build Not Just Possible But Inevitable
Along with finance, there is one other factor that can help your self build dreams become inevitable.
And that is advice and expertise.