Private banks offering self-build mortgages for larger mortgage loans
Trinity Financial has access to private banks offering self-build mortgages to wealthier clients looking for at least £750,000+ loans.
A selection of private banks offer self-build mortgages to clients building homes across the UK, and they are happy with a range of construction types, including Huf Haus and eco homes.
Most private banks have a £1 million minimum loan size for self-build and they can lend to clients if they need to raise funds to purchase a plot of land or refinance land they already own.
One of the more competitively priced mortgages is 3.25% over the Bank of England base rate with a 1.5% arrangement fee.
This bank assesses the client's overall financial situation rather than their initial mortgage requirements and the maximum mortgage income multiple is 4.5 times salary. No assets will need to be transferred for management as part of the transaction and the lender will want to meet the client before an application is accepted.
Another private bank charges 4% over the Bank of England base rate and has a 2% arrangement fee. The maximum term is two years and the lender is more likely to lend to clients with complex income structures and overseas buyers. The maximum loan to development is 70% based on the value of the land and costs of the development including stamp day, planning costs plus bank interest and fees.
Aaron Strutt, product director at Trinity Financial, says: “Self-build mortgages tend to be offered by the smaller building societies and the rates can be quite expensive. The private banks can be flexible, for example, they can lend if you are planning to build two properties and sell one, and provide funding quickly.”
Clients do not need to have any previous building experience but they will need to use a builder with a good track record. They also use a monitor to ensure the bank is kept up to date throughout the process.
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The banks will want to see quantitate surveyors reports and work with bank monitors before next stage funding is released.
There is not normally a cap on the number of stages the funds can be released there may be charged at each important stage of the building inspect the site.
Funds will often be released for:
- Land Purchase
- Footings and Foundations Stage
- Construction of the walls (Wall Plate Level)
- Roofed In
- Internal/Final Completion
Once a property is built and the building has been signed off the self build mortgage rate may well revert onto an expensive reversion rate.
It is possible to agree to the remortgage to take effect once the property is built so the repayments reduce rather than potentially increasing.
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