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First Time Buyer Self-Build Mortgages

See how expert advice could secure a first time buyer a self-build mortgage

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: December 7, 2021

We get lots of enquiries from first time buyers who want to build their own property.

Many of them come to us unsure about what their financing options are and what they need to do next.

The good news, is that we work with specialist mortgage brokers who arrange loans for self-build projects all the time, even in instances where the borrower is a first-time buyer.

To give you all the information you need about first-time buyer, self build mortgages we’ve created this guide.

Can first time buyers get a self build mortgage?

Yes! Although Lenders can typically be more cautious when loaning to first time buyers, especially if the loan is for a self build project and not a ready built property.

This can affect your ability to borrow, meaning that the process of finding a lender for a self build mortgage can be tedious.

That being said, there are lenders who will consider loaning for self build projects, in the right circumstances.

larger deposit of around between 25-40%, along with a good credit history and proof of reliable income, can improve your chances of being approved for a self build mortgage as a first time buyer.

Self build mortgages vs residential mortgages for first-time buyers

Self build mortgages are a new area to many first time buyers who may have previously been told that they needed a residential mortgage. This is often not the case.

Read below to see how a construction loan differs to a residential mortgage.

Residential mortgage

A residential mortgage is usually required for a borrower who wants to purchase a property that has already been built.

  • 5%-40% deposit may be required (although this varies depending on your circumstances)
  • They can be easier to qualify for, and there may be more options available (depending on your circumstances)
  • They are typically charged with a lower interest rate than a construction loan

Construction Loan

If you want to build a home on your own plot of land, then a new construction loan is usually a better option for most people.

  • A 25%-40% deposit may be required
  • You’ll need specific building plans, a construction contract, and details of how much the build will cost. For a first time buyer, most lenders will insist that all of the works be carried out by an experienced and reputable professional rather than by yourself.
  • A new construction loan  can be more difficult to qualify for with fewer options available
  • This can mean that they are charged with a higher interest rate
  • The loan is released in stages of the build and not in one lump sum
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How do I get a self build mortgage as a first time buyer?

Lending for the construction a new property from the ground up comes with a lot of risks for a lender.

For example, if for some reason the build isn’t completed and the borrower defaults on their loan repayments, an unfinished home is a lot harder to sell to settle the debt.

This is why lenders can be cautious when lending for new constructions, especially to inexperienced buyers.

Because of this, you’ll need to speak to a mortgage broker who can put you in touch with a specialist lender.

Find a whole of market broker

A lot of brokers claim to be whole of market but when it comes down to niche areas such as first time buyer construction loans, they have no real experience.

This can unfortunately lead to misinformation and even result in borrowers being turned away for loans, simply because they have been advised incorrectly.

To find a self build mortgage broker that specifically finds self build mortgages for first time buyers, speak to an advisor.

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Am I eligible for a self build mortgage?

Every self build mortgage lender is different, so the requirements for a self build mortgage can differ depending on which lender you decide to go with.

  • 18 years or over
  • Have sufficient income to pay your loan back (most lenders require that your loan be no greater than 4.5 x your annual income)
  • Have a deposit of at least 25% of the build cost, although some lenders can ask for a deposit of up to 40%

Most lenders will also require evidence of planning permission and detailed building plans including how long the build will take, how much the materials and labour will costs and a copy of any contracts with suppliers.

How much can I borrow?

Most self build lenders will loan you 75% of the land’s current value, and then 75% of the end value of the property you plan to build.

That being said, the amount you can borrow will vary heavily on a number of factors including:

  • The amount of money you earn a year
  • The size of your deposit (you may be asked for up to 40% deposit because of the additional risk you pose as a first time buyer)
  • The type of property you plan to build (unique and non-standard constructions can be perceived as a higher risk)
  • The location of the build
  • How long the build is estimated to take
  • Your credit history
  • Your type of income and how reliable your income is

The key to truly understanding how much you can borrow, is to get the right advice for your situation.

Talk to one of our advisors here and they can put you in touch with a broker that’s had real experience with construction mortgages for first time buyers and is in the best position to help you.

Speak to an self-build mortgages expert today

If you have questions about first time buyer self build mortgages or want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.


Where do I gain planning permission?

Planning permission is granted by your local authority and without preparation, can be difficult to obtain because of local restrictions or the design of the building you propose to build.

Working with a self build architect can help to smooth the process. Using their experience and knowledge of the local councils, they can preempt any issues that might arise on your planning application. This can help to save time as well as money in application fees.

When are the funds for a construction loan released?

Most lenders release a construction loan in stages and on completion of each stage, a valuer will visit the site to confirm that the project is on track.

The first instalment is usually released after the borrower secures a plot of land. Thereafter, money is released when the foundations are laid and then when the property is build up to eaves level.

There are also a handful of lenders who are happy to release funds at the beginning of each stage, which is useful for borrowers who don’t have their own capital upfront to pay the builders and suppliers.

How can a self-build mortgage broker help me?

  • Your mortgage broker can go through your finances with you, looking at your income and outgoings to assess how much you can afford to borrow
  • They will also use your credit report to preempt how any given lender will assess your risk as a borrower and to avoid unnecessary mortgage credit checks.
  • The amount of paperwork typically involved with a construction loan is greater than a standard residential mortgage which can be overwhelming. A mortgage broker can fill out any necessary documents and send them on your behalf
  • A whole of market broker will have access to hundreds of self-build lenders and rates and can compare the market to find you the best interest rate and mortgage terms
  • The advisors we work with know exactly which lenders offer self-build mortgages to first-time buyers, and which ones offer the best rates on these deals.

Ask us a question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in self-build and first time buyer mortgages.

Ask us a question and we'll get the best expert to help.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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