Build Borrow Option

How much you can borrow is usually assessed on the basis of the architect’s plans and detailed costing. Typically though, you can borrow up to 75% of the land’s value. Funds are then released bit-by-bit in stages as the building work progresses. This way, self-builders are saving money by not paying interest on a larger mortgage than they really need. The average value of a single building plot, suitable for the individual builder, is currently close to 45% of the overall outlay of constructing a new home.

With a fixed rate Self build mortgage UK, you are guaranteed to pay a certain level of monthly payments for an agreed period. A capped mortgage is a combination of fixed and variable mortgage. There is a maximum rate over which you will not be charged for a certain period.

If the SVR falls below the cap, your payable rate follows it down. On the other hand, the variable rate mortgage means the interest rate may change. In general, the standard variable rate (SVR) charged by the mortgage lender will mirror the Bank of England Base rate, so you should monitor that rate to suggest what your mortgage rate may be.

Find out how much the average lender will offer you. If this amount falls short of the amount you need, you can then start looking for lenders who offer a little more than the norm to widen your build borrow options. Then check how much you need to spend - perhaps from house price indices or seeking an advice of experts and even friends.