The idea of building your own home is an exciting one but for most people it remains a fantasy. Where do you start? What costs are involved? Do you need planning permission? Are there restrictions? How do you know how much is “too much”? The questions can be endless. There is so much to do when it comes to a self-build, every stage is important and cannot be missed. Unless you’re already experienced in building projects or you’ve researched it thoroughly (watching Grand Designs doesn’t quite count, sorry!), it’s unlikely that you know every single detail of what is involved with a massive project like a self-build.
Building your own property can seem very attractive, particularly if you are struggling to find a property that measured up to your expectations. Whether you buy, build or buy-and-rebuild, it’s your decision and you need to have all the facts.
A self-build home is just that; a home that you build yourself. A home that’s based on your designs and ideas, the opportunity to build the perfect property for your needs. Many self-builders will hire a project manager to oversee the on-site contractors, but make no mistake, that doesn’t mean that you won’t have full control over the process.
Self-building involves finding land to develop; deciding on the home you want from either existing plans or having an architect design plans to your specification; arranging the right project management support to oversee the build; and actually building your new home. Building from your own plans gives you total flexibility however this carries a cost and sometimes too much choice can be a bad thing. Buying ready-made plans for a chose property type can be an ideal option for some who want tighter guidelines to work to however you may be restricted to a design that fits your plot. Whichever you choose you’ll have plenty of options from layout to orientation of your home on plot to interior and exterior decor.
Mortgages for self-build properties work a bit differently to other residential mortgages. The principle is still the same: you approach a lender, the lender gives you a loan and then you pay back that loan over a stated term each month with interest added (if it’s a repayment mortgage). However, to get that loan from the lender not only would you have to pass affordability tests and have a deposit, but you also need to show detailed plans for how you will build the property and the costs to maintain it. Once you get approval, the lender will release the funds to you in stages so you can pay for the various stages of your project.
This handy table from BuildLoan shows an example of when the payments would be released to you, typical for different types of self-builds.
Is this sounding complex? It does take some time to understand, particularly when it comes to a self-build mortgage but it could all be worth it if the pros out-weigh the cons.
Pros of Self-Build
Cons of Self-Build
Finding the right place to build your home can sometimes be a nightmare. There’s only so much land available for you to buy in the UK, and there’s no guarantee that it will be suitable to build on. You’ll need to consider the local amenities, whether the right schools are in travelling distance, what the wifi will be like, energy networks, clean and waste water, how close the shops are and, oh, don’t forget the neighbours. You could end up building a home in a neighbourhood of people you just don’t get along with, but if a property does not exist on the land right now, no-one knows what the locals will be like! Furthermore, future changes to government rulings could mean that your idyllic rural retreat may one day have a large housing estate built right next door. Don’t, then, forget to consider that even if you can build your house exactly how you want it, it might not be in the place you imagined. For some people that might ruin the idea of a self-build property entirely.
The important thing to remember is to think realistically! Plan your dream home sensibly – you do need to live there once it’s built after all.
Consider each stage of the self-build project in detail, imagine yourself going through the self-build process. Ask yourself: will the project be a success? Will it be stressful to manage alongside your work and family lives? Building your own home has its foundations (see what we did there?) in your goals. Will this house give you the flexibility and freedom to grow and flow with the demands on the life you want to lead? Always keep in mind that this project must suit you for the long term, it doesn’t just end when the build is complete. Maintaining the property and selling it in the future should be considered before you even start.
Consider all the options you have available to you. In some areas self-building will mean moving miles away to find a plot of land. Instead, would you consider renovating or converting an existing property?
In any case, start by defining your goals, decide what you ultimately need in a property and figure out what other things you desire but could sacrifice if necessary. From this point you can start to make plans and research more in depth what is possible for your budget, needs, area and other circumstances.
It’s a good idea to start making up the plans you would show a lender, as a test to see if you could really handle building a self-build property.
If you need any assistance with working out how much money you need, and if lenders will be willing to lend you this, give Active Brokers a call so one of our advisers can run through things with you.