Getting the best rate on a self-build mortgage requires a considerable amount of research. But it’s well worth the effort as there are big savings to be made by choosing the right loan.
In this article we’ll look at typical rates for self-build mortgages, some of the lenders that offer this type of loan and why seeking expert help from a self-build mortgage advisor can help you avoid a costly and regrettable mistake.
What interest rate can you get on a self-build mortgage?
Rates for self-build mortgages are typically higher than those for standard residential mortgages. This is because fewer lenders offer self-build mortgages so there is less competition, and the fact that self-build home loans are considered riskier.
Our rates table below will give you an indication of the types of rates you can get for a self-build mortgage at the moment.
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Today’s best rates
Take a look at our rates table for an idea of the current self-build mortgage deals available.
Looking for more rates and deals?
We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.
Last updated September 2023
Please note that the above rates are purely for example purposes, were accurate at the time of writing, but are subject to change. Speaking to a mortgage broker is the best way to find the most up-to-date deals.
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How to compare self-build mortgage rates
With so many variables to consider, finding the best self-build mortgage deal can seem daunting. So, we’ve put together this short guide to choosing the right deal for you.
Do your maths
It’s important to consider all costs associated with the building project, from materials and contractors to fees, insurances and, if necessary, your accommodation costs while your new home is being built.
Once you’re satisfied you’ve factored in every eventuality, add 10% for contingency expenses. When you have a realistic idea of how much you’ll need to borrow, you’re almost ready to start comparing rates.
Get details of builders and contractors
This is crucial to securing the best rate possible as lenders need to have confidence in your project. Showing them that the contractors who will carry out the work have experience in successfully completing similar projects is one way to give them faith in your plans.
Don’t be afraid to ask prospective builders for evidence of previous projects which can help secure the finance. After all, it’s in their interests too.
If you’re doing most of the work yourself, you’ll still need to supply this information. Remember this is a business transaction so make sure you prepare a professional document to present to lenders.
Speak to a specialist self-build mortgage broker
Niche areas of lending almost always require expert advice. A broker will help you plan and execute your project in the most cost-effective and profitable way, offering advice and guiding you through the whole process.
The average high street mortgage broker will handle just one self-build application per year. Specialist brokers deal with them every day and are far better equipped to provide the inside knowledge and scrutiny you need.
The brokers we work with have whole of market access and are specialists in their field. To speak to an expert about your self-build mortgage application, get in touch.
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Other eligibility factors to consider
It’s not possible to give a complete rundown of everything that lenders will take into account when assessing your application as some will be unique to your project. But it’s worth bearing in mind that the best rates are reserved for projects and applicants who best match a lender’s attitude to risk.
Some of the things to consider when choosing the right lender (and subsequently the right rate) are:
- Deposit – The bigger the better.
- Self-build type.
- Method of construction – Non-standard constructions will have a limited pool of lenders
- Credit history – Bad credit won’t necessarily outweigh a solid project proposal but will be considered by lenders.
- Age – Most lenders have an age cap for borrowers.
- Exit strategy – How will you refinance to a more affordable mortgage product when the building is complete?
Get matched with a self-build mortgage specialist
There are several complexities to navigate when comparing self-build mortgages and, without an expert eye, it’s easy to miss some small print or get tempted by a headline rate on a product that doesn’t suit your project.
So, finding an advisor that knows this market inside out is essential to make sure you get the right deal. Our unique broker matching service will pair you up with a specialist who has experience in securing finance for projects just like yours.
To get matched with your ideal broker call on 0808 189 2301 or enquire online.
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