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Self-build mortgages NI (Guide)

Self-build mortgages NI (Guide)

What are self build mortgages in NI?

If you want to build your own property then you will likely need a self-build mortgage.

Self Build mortgages in Northern Ireland will be from the same self build mortgage lenders you can access in England or Scotland although some self build NI mortgage lenders may lend specifically in NI due to their knowledge of the area.

How do Self-build NI mortgages work?

A self Build NI mortgage will usually require you to put a mortgage deposit of 20% to 40% due to the increased risk of self-build mortgages. This means self-build mortgage lenders will offer Loan to value rates of between 60% to 80%.

The mortgage lender will then commit to how much they can lend you in total but a self build mortgage lender will usually not just give you the self build mortgage in one large sum but rather they self build NI project will be broken down into stages and once you successfully complete a particular stage the self build NI mortgage lender will then release the mortgage funds for the next stage.

Types of Self build NI mortgages?

  • an arrears-based mortgage releases money in staged payments as each stage is completed

  • An advance payment scheme releases money before each stage of construction and removes the need for bridging loans - the stages can be fixed or flexible but there are usually five and these depend on the type of building work

What stages could a self-build mortgage lender lend on?

  • Foundations complete
  • Wall-plate complete
  • Roof complete
  • Plastering complete
  • Final completion

Why are self build mortgages considered risky by the lender?

Self build mortgages are considered as risky by the mortgage lenders because you may run out of money due to underestimating your costs or costs may spiral out of control during your project and end up needing more money which the self build NI mortgage lender may not be keen on lending you as it may surpass the total value of the home you are building.

This could mean that you could find yourself in negative equity before you even completed your self build NI project.

This will then leave the self build NI mortgage lender with a dilemma as they have to go through a process of home repossession to recover their funds and even after this they may not be able to sell a half build property on to any developer and certainly not for market value.

How do you get a self build mortgage in Northern Ireland?

To get a self-build mortgage you may need the help of a mortgage broker who has some experience of self build mortgage lenders and their lending criteria.

This will mean the self-build mortgage broker will be able to recommend self-build mortgage lenders in Northern Ireland who can lend to your project.

What documents will you need when applying for a self-build mortgage in Northern Ireland?

  • The site map, showing where the house will be built
  • House plans, showing the size and layout of the house
  • Valid unrestricted planning permission
  • Bank statements
  • Tax returns
  • Identification documents( driving license, passports)
  • Proof of address( utility bills etc)
  • P60
  • Payslips for the past 3 months
  • Proof of your self-build mortgage deposit.

Self build NI mortgage FAQs from around the web

Can I get a mortgage to build my own house?

Yes, you can get a mortgage to build your own house. These are known as self build mortgages. They can either pay you the mortgage funds at the beginning or end of development stages. Once the property has been built you can then remortgage into a standard residential mortgage.

Are self build NI mortgages more expensive?

Self build mortgages are typically more expensive than residential mortgages due to the much greater risks involved for the mortgage lender. Regardless of the costs of a self build mortgage there are still advantages for some borrowers.

Do self build NI mortgages include land?

Not all self build mortgages will include land. Some lenders will only lend on the construction of the property but you may be able to find self build mortgages for land or land and the property.

Are self build NI mortgages interest only?

Self build mortgages can be interest only or capital repayment. You may find that the requirements for an interest-only self-build mortgage are quite high.

Is it cheaper to buy or build a house?

This completely depends on the costs of construction and the cost of purchase of the house in the region you want a house. It may be cheaper to build a house in some regions than to buy but the risks involved may be substantial.

Is it hard to get a loan to build a house?

Getting a loan to build a house is much harder than getting a standard residential mortgage as there are more risks with using a loan to build a house and hence the lender will insist on more stringent checks before agreeing to lend to you.

Can you get a mortgage to build your own home UK?

Yes, you can get a self-build mortgage to build your own house in the UK. These mortgages will help you build your house by releasing funds at stages of your house development. The loan to value rates offered by lenders differ but the cost will typically be higher than standard repayment mortgages.

Can you get a mortgage for land and build a house?

Yes, you can get a mortgage to buy land and then build a house. There are mortgage lenders who will offer you a mortgage to buy the land and then build the house. These could be bridging loan lenders, some mortgage lenders etc

Getting a self build NI mortgage

Some high street banks may be able to offer you a self build mortgage but usually the specialist self build mortgage lenders will be a better option.

Using a mortgage broker may also be very helpful as self build mortgage brokers may have a lot of experience with the market and be able to recommend you the best mortgage product based on your affordability.

This is a much better outcome than going to a mortgage lender who can only advise you on the products they offer.

Note: You may also be expected to hire registered professionals throughout the project who have the correct indemnity insurance in place in case anything were to go wrong.

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Self-build mortgages NI (Guide)
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