A self-builder should expect to pay between 0

A self-builder should expect to pay between 0.75 and one per cent more than for a standard mortgage. This is, however, significantly lower than the 2 per cent-over-base rate banks generally charge to property developers.The premium charged for a self-build mortgage reflects the lenders’ extra administration as well as the risk: there are no guarantees about the value of the property until it is finished. The company can introduce self-builders to lenders such as HBOS, Skipton Building Society and Lloyds TSB Scotland.The Buildstore Accelerator mortgage offers owners loans of up to 95 per cent of the land price, as well as the same percentage for construction costs.There is, however, a premium attached to self-build mortgages. Local building societies are often receptive to loans that need stage payments. Examples include the Swansea, Scottish and Newcastle building societies. Nationally, Norwich and Peterborough building society has a strong reputation for self-build loans, according to Ray Boulger, senior technical manager at the mortgage brokers Charcol. The specialist self-build service Buildstore also offers mortgages.

Last year, the Britannia Building Society stopped selling self-build loans.”Self-build is a niche market,” says Mike Sims, the society’s mortgage marketing manager. “Self-build mortgages are complex, both to sell and to process. We found that, despite training our staff to a high standard, it was difficult to maintain that knowledge because staff dealt with self-build cases on an infrequent basis. Also, the onset of mortgage regulation has made the sale of self-build mortgages more complicated. This may explain the more recent decisions of a number of other lenders to withdraw from this lending sector.”There are, though, still several mortgage lenders who remain committed to the market. Unless a self-builder has a substantial amount of cash to hand, or can borrow from friends and family, he will need a mortgage that is tailored to the construction process.

This means finding a mortgage lender prepared to release funds in stages, including for land purchase.But despite the growing interest in self-build, it is an area of mortgage lending that some lenders are finding hard to service. Each year, about 20,000 people build their own homes, according to Government statistics, and the number is rising. The idea of having total control of the design of a new home explains the popularity of self-build. There is also a good chance, if the home is well designed, of making a significant profit when it comes to sell. Financing a self-build project, though, remains a challenge.

The self-builder’s website www.selfbuildit.co.uk estimates that the average self-build project costs £140,000, and that two-thirds of self-builders need a mortgage.
The number of financing options is far more limited than for a conventional home purchase. It can be extremely difficult to borrow the money, and the lack of secure moorings puts your investment in peril.The main problem is the need to haul your investment out of the water every few years for an insurance survey, according to Sarah Blackburn of Lane Fox.She recently let the houseboat Chairman at the famous moorings at the end of Cheyne Walk in Chelsea. The boat was for a while the home of the comedy actor Nigel Planer.”I would never advise anyone to buy a houseboat as in investment,” she says. “The need for dry docking every few years disrupts tenants – you can’t just ask them to leave for a couple of weeks.”You can’t even put them up in a hotel because of the risk that the work might take longer than expected.”It is a different matter when the owner cannot live on their beloved boat for a time, but aims to return at some point.”Young couples buy them, live in them for a while and then have to move out when children arrive, but they can’t bear to sell,” Blackburn says.. High-earning individuals such as lawyers and surgeons use the boats as floating pieds-a-terre, staying overnight once or twice a week.