How Self-Build Mortgages are Calculated

Self-build mortgages can be ideal for borrowers with the means and expertise to build their own home or oversee its development, but how are they calculated?

Because everyone is different, it’s difficult for a mortgage calculator to take into account all factors these products involve, but the good news is that the self build mortgage advisors we work with are experts and can provide a clearer picture on how much you can borrow and what your repayments are likely to be.

Calculators can provide a rough guide, so we’ve put together this article on how self build mortgage calculators can be used by both prospective customers and UK lenders, which covers:

How are self-build mortgages calculated?

For anyone considering self-build mortgages for a property in the UK, the key piece of information needed from any type of calculator tool is an indication of how much you may be able to borrow and an approximate monthly repayment.

Most traditional calculators simply require a purchase price, size of deposit, mortgage term and interest rate to offer an indication of how much you can borrow and what it could cost.

Will a self-build mortgage calculator tell me how much I can borrow?

Not definitively. Mortgage borrowing for self build projects, by their very nature, involves a great deal more thought and planning before you can confidently type into a calculator how much lending you feel you will need.

Things to consider would be:

• Size of building plot required and an estimate of the cost
• Size of property you want to build
• Type of building materials you want to use (bricks and mortar, timber frame etc)
• Cost of internal decoration and design
• Cost of external landscaping
• Is it a self-managed project or by a contractor?

The planning stage can feel quite daunting (particularly if it’s your first time). This is where we can help. The advisors we work with have years of experience with self build mortgages and will have a deep understanding of what information you will need to plan out your project.

If you make an enquiry we can arrange for an expert to contact you directly and discuss further.

Did you know… A regular broker will only deal with approximately 1 Self-Build mortgage a year.

Where can I find a reliable self build mortgage calculator?

Self build mortgage calculators are tools used by both lenders and advisors to give an initial indication of what you may be able to borrow for this type of lending.

Such tools can also be found on mortgage lenders’ websites and other financial hubs – but keep in mind that online calculators will only give you a rough idea of the amount you’d be able to borrow and how much your repayments will be.

If you’d like to discuss which self build finance options best suit your circumstances, make an enquiry and we can arrange for an advisor we work with to get in touch.

Do all UK lenders use their own self build mortgage calculators?

Yes, it’s quite typical for most UK lenders to have online calculator tools for their suite of mortgage products and for these to be available for you to use.

Bear in mind a self build mortgage calculator on a lender’s website will usually be programmed in line with that provider’s in-house affordability criteria. As each lender’s criteria will vary, this may produce a range of different results based on the information you provide.

How reliable are self-build mortgage calculators?

Online calculator tools are used for indication purposes only. Each lender follows their own internal eligibility criteria before reaching a final decision on what they would be prepared to lend a customer. All of these factors may affect how much you can borrow.

This criteria includes:

• Affordability assessment (review of income and outgoings)
• Age of applicant(s)
• Applicant’s existing lending commitments
• Applicant’s credit history
• Size of mortgage required
• Size of deposit
• Mortgage term required
• Type of property (in this case, what type you are looking to build)
• Experience in property

This is where we can help. The advisors we work with adopt a ‘whole of market’ approach and, therefore, will be able to identify which lenders offer the most favourable terms for self build mortgages. If you make an enquiry we can arrange for an expert to contact you.

Speak to an expert on self build mortgages

Self build mortgages can help you achieve your dream of building your forever home, however, they can be quite complex projects requiring careful planning. Lots of people in your situation seek professional advice to assist them before making a final decision.

If you have questions and 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 mortgage advisor 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.