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THE GROWING APPETITE FOR SELF-BUILD MORTGAGES

By Michelle Westley

Of all the so-called “property porn” TV shows in the last 20 years, Grand Designs has captured the public imagination more than most.  The builders have the crazy zeal, vision and determination to start building their own home from scratch exactly how they want it.  There have been homes on clifftops, properties built in the middle of forests and ecologically friendly houses built to spec.  The show is aspirational but it doesn’t pull any punches about how difficult it can be to build your home as viewers follow every unexpected twist and turn.  It is a fantastic show and only for the adventurous property owner, especially as the mortgage aspect has always appeared so difficult to approach.

Self-build mortgages release cash at every stage of the build, typically before or after each storey is built.  They also have very different criteria and should be assessed on a bespoke basis with proper qualified financial advice. They are not your typical five-year fix on a standard home.   But they are also not monsters that brokers and borrowers should avoid. They are perfectly accessible as a specialist product with the right service.

The biggest issue is always that brokers need to be sure they are leaving their clients in safe hands. Nothing is more important than trusting your client base with another company so firms need to know it is going to be an easy and reliable service. For example, Brightstar’s new lending brand, Private Label, offers a self-build product at a rate of 3.99% for bespoke builds.  It also allows for drawdowns that are tailored to the clients’ personal project. We have been surprisingly pleased with the huge level of interest and enquiries it has drawn.  The product allows loans from £250k to £1m, even for first-time buyers, and for those with elaborate plans.  It is available up to 65% of the purchase price of the plot, 100% of the build costs and a maximum of 75% of the gross development value.

One popular self-build project today is for children looking to build plots of their parents’ land and create their own house.  The UK Government has long supported the self-build sector with warm words and pledge to cut red tape to increase its role.  Former housing minister Grant Shapps made it his mission to boost self-build when he took office in 2010 and successive ministers have tried to make it easier to do-it-yourself.  The Self-Build and Custom Housebuilding Act 2015 aims to make it easier for lenders to lend in order to kick-start self-building.  The 2015 Conservative manifesto backed Right to Build, which would require councils to allocate land to local people to build their own home.

It is no secret that Britain needs to build more houses, especially for first-time buyers and the self-build market is ripe for growth.  And in an era where products are routinely customised and made to order then it is likely demand for self-build will continue to grow.  Government action combined, demand for housebuilding and innovation from specialist lenders and mortgage brokers provides a solid platform for borrowers to reach for self-build.