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Best Self Build Mortgage Rates

How to get the best self-build mortgage rates.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 23, 2022

Self-build mortgages are perceived as higher risk than standard mortgages, and lenders are typically warier about lending on this type of property.

As such, you may find that interest rates are higher than you’d expect with a typical or equivalent residential home loan.

We receive many enquiries from customers relating to self builds, so read on to find out how to secure the cheapest interest rates for your self-build mortgage, and what other factors impact getting the best deal.

Interest rates for self-build vs residential mortgages

So, how do self-build mortgage rates compare to that of an equivalent residential one?

When calculating your eligibility for a self-build, there a number of additional factors lenders will consider alongside the usual checks, and they will likely have an impact on the rates you end up with.

These variables include the self-build type, construction method, location, schedule of costs and materials to be used.

Perhaps most significantly, lenders also look for evidence that you have the relevant expertise and means to construct or supervise a self-build project.

Due to these additional risk factors, you can generally expect higher risk interest rates with a self-build than you would with a residential mortgage application.

How do interest rates compare for residential vs self-builds?

As a benchmark figure, the interest rates for a standard residential mortgage tend to be around 2-4% at the time of writing, compared to self-builds which generally vary from between 4-6.5% per annum.

While this may not sound a particularly significant difference, the costs certainly rack up over time. But keep in mind that most borrowers remortgage to a mainstream lender once the build is complete.

All providers have different rules on when you can refinance a self-build loan, but some will allow it after the property is 6 months old, others 2 years old, and standard remortgage criteria/rates would apply.

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How do I get the best self-build mortgage rates in the UK?

For access to the cheapest self-build mortgage rates, we can’t stress the importance of approaching a whole-of-market self build mortgage broker.

The specialists we work with will not only be able to identify all the willing self-build providers across the market, they will also find you the best deal to suit your specific situation.

Your individual circumstances can play a significant role in defining how competitive the interest rates you’re offered will be.

On a personal level, this refers to the borrowers:

  • Loan to value (LTV) – the size of the deposit required for a self-build is typically higher than a standard residential mortgage to account for the upfront labour and material costs.
  • Affordability – for a single self-build mortgage application, most lenders will loan up to 4.5 times the borrower’s income, or for a joint application, a combination of the combined salaries. The competitiveness of rates can be affected by your job type and length of time in your role.
  • Credit history – as the pool of lenders for self-build mortgage products is small, any history of adverse credit may negatively impact how competitive the interest rates you receive for your self-build are. However, all providers work to different criteria, and some are happy to offer a bad credit mortgage.
  • Age – Many providers have age restrictions when it comes to lending for a mortgage. This means older borrowers may be limited in your choice of lenders, and therefore interest rates, which can be further inhibited if you’re after a high risk product such as self-build mortgage.

For more information on any of the above, or if you’d like us to carry out an accurate self-build mortgage comparison bespoke to your individual circumstances, get in touch.

Did you know… A regular broker will only deal with approximately 1 Self-Build mortgage a year. Increase your chance of approval and access more deals by getting started with a Specialist OMA-Expert – who’s everyday expertise is Self-Build mortgages.

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What are the current self-build mortgage rates?

We’re often asked what the current rates for self-build mortgages are, and it can be tricky to cite specific rates that will still be accurate if and when you decide to proceed with your application.

This is because mortgage interest rates are constantly in flux, and can change at any time. You’re best off seeking advice as to what you can do to guarantee the best self-build rates for your circumstances – and this is where we can help.

What are the cheapest self-build mortgage rates?

Interest rates fluctuate continuously, but generally speaking you can expect slightly higher rates for a self-build than you would with a standard residential mortgage.

The cheapest interest rates within the constraints of self-build mortgages tend to be reserved for those with higher deposits, clean credit history, low debt-to-income (DTI) and sufficient evidence that you have the experience to carry out a self-build project.

But even if you don’t meet all these requirements, it doesn’t mean that there aren’t competitive products out there for you.

One thing you should also keep in mind that the products with the “cheapest” interest rates won’t necessarily be the best. There’s no point taking a low-rate deal if it comes with hefty fees and charges which drive up the overall cost.

The brokers we work with are mindful of this and will make sure the overall cost is taken into account when they pair you up with a lender.

How do I compare self-build mortgages?

If you’re after a quick self-build mortgage comparison, it can be tempting to refer to online rates tables or calculators – but this is inadvisable.

Not only are you unlikely to receive a true whole-of-market comparison, but online comparison tools are also unlikely to consider your needs and individual circumstances – meaning the possibility of being matched with an unsuitable product, or a declined application.

For accurate, up to date advice tailored to your individual needs, speak to a whole-of-market broker – they can carry out a self-build mortgage comparison on your behalf, saving you time, money and potential disappointment.

Speak to an expert to find the best self-build mortgage for you

If you need help finding the best value self-build mortgage deals or have any further questions, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.

Our customers consistently rate us 5 stars on Feefo, largely due to our high levels of service, but also because we offer offers a 5-star service with access to expert brokers who:

  • Are whole of market.
  • Have a working relationship with all lenders, including independent self-build mortgage advisors.
  • Already know the lenders to go to as they successfully arrange self-build mortgages every day.
  • Are OMA Accredited advisors.
  • Have completed a 12 module LIBF accredited training course.

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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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