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Pros & Cons of Self-Funding Mortgages

Pros & Cons of Self-Funding Mortgages

Building your own home? A self-build mortgage may be for you.

For those brave enough to take on building their own home, a self-build mortgage can provide some much-needed financial help. Whether you’re having professionals do the work or you’re doing it yourself, unless you have enough cash already to see the project through to completion, you’ll want to consider this specific mortgage to fund the build itself and/or purchase the land.

There are many people out there who love the idea of having their own self-build house. In fact, 13% of all new houses built in 2016 were self-build and this is expected to rise year on year. Why? Well, consider this – a home that will suits your family’s requirements, that is unique to you and will be made to your own personal specifications – plus you can save money!

This all sounds great, but in that case, why isn’t everyone self-building? Although its popularity is increasing, there remains a nagging apprehension about the commitment and investment it requires. This is perfectly normal, and pretty much sums up what many would-be self-builders think about before taking the plunge. The idea sounds great but you’re probably a bit scared of doing it. Well, the best thing to do is to be prepared and look at all angles. This article aims to help by weighing up the options carefully and looking at the pros and cons, so that you can make an informed decision.

The big pro points:

Stamp Duty. One major plus with self-builds is that you won’t pay stamp duty on your completed property – instead you just pay on the price of the land purchase (please bear in mind that self-build mortgages tend to have higher interest rates than standard mortgages).

VAT. You can also claim back VAT at the end of the build – make sure however that you keep all receipts safe – you can only claim VAT once on each project, so save up all the receipts and do it all in one go right at the end.

All in all, a self-built home is often 20% cheaper buying a house outright, because you also save on developer’s profits and planning.

Find the perfect plot. Want a stream through the garden, with views to die for – and a great house? That’s really only realistically achievable through self-building, unless you’re incredibly lucky or prepared to foot a fairly hefty bill.

Get the space you want. Choosing to embark on a self-build house means you’ll guarantee a home that is unique to you and designed exactly how you want it. You can say goodbye to serving hatches and irritating supporting walls.

Go Green. It is far easier to ensure your build has green credentials if you start at the planning stages. It will also be cheaper to install – and of course, there’ll be no need to replace older boilers and plumbing systems.

And some things to consider:

Plots and Planning. Finding the right plot can be a problem. Although it holds clear advantages if you can find the right spot for your new home, bear in mind that the search might take a little while. Much of the best land has been snatched up by large developers so make sure you do your research and get in there quick!

Cost control. It’s not always cheaper. Unless you keep a strict eye on the budget you will find that costs can spiral out of control. Again, it comes back to being efficient and organised – this will save you money and headaches in the long-run.

Mortgages. Although there are mortgages available for the self-build house it can be difficult to get one in this current economic climate. Again, research is key – find out the facts before you begin so you have realistic expectations.

And finally:

This blog has been written to provide an honest summary of how to self-fund your new home. I don’t want to sugar-coat things because that can lead to a very disappointing experience – it’s better that you understand the ups and downs of self-building before you begin.

However, taking everything into consideration, I’d still urge you to consider going ahead. Speak to a financial advisor and have a good think about the pros and cons. Creating your dream self-build house and creating perfect happiness can ultimately provide you with more satisfaction than buying traditionally – if this fills you with excitement I’d seriously consider the options because it can be a wonderfully fulfilling adventure!