01 October 2022

Self-build: there’s mortar it than greenfield sites

By Andrew Sadler, Key Account Manager, Suffolk Building Society

Picture a self build project - it’s likely you’re imagining a brand new project from the ground up (or, as is a bit of a trend right now, foundations down). You’re not wrong! But it also covers conversions, renovations and knock down and rebuilds too.

Even if not starting out with a bare plot of land, your client will need a self build mortgage if a property is or will be uninhabitable, or left without a kitchen or bathroom for an extended period of time, and/or if structural alterations are being made that affect the stability of the building.

As the finance works differently to a residential mortgage it might seem like an added complexity for your client, on top of the headache which comes with building works. We’re here to guide you through the process every step of the way - so you can be there for them.

Criteria in 5.

We all know every applicant is different, but with a self build mortgage every property is different too! If you have a self build case it’s best to call us so we can go through the details with you, but as a starting point here’s a handful of things you should know:

  1. 80% LTV to £1m, 70% LTV to £2m+
  2. We lend against land value.
  3. Flexible stage releases.
  4. Interest only available during build.
  5. Day one remortgages permitted (as long as your client shows as the landowner on the Land Registry prior to application).

Case study: James and David, renovation of a character property.

James and David had bought a beautiful property for £450,000. It had many original features but had not been well maintained. The windows, roof, kitchen and bathroom all needed replacing and they wanted to add an extension. The work would take at least 6 months and make the property uninhabitable for a time.

James and David’s broker came to us, as the application could be made as soon as the clients show as owners on the Land Registry. With building reg approval and everything else in place here’s how it worked.

  • Borrowed £300,000 to repay the existing lender and £180,000 to do the work.
  • Took the money in stages as the build progressed and the value increased.
  • We lent up to 80% at each stage
  • On build completion they switched to a retention product without penalty.

This resulted in a happy broker able to place a case, and happy borrowers living in a very smart house now worth nearly £680,000.

What our self build borrowers say.

In June we spoke to a group of 19 self build borrowers. 63% (12 people) said the main reason for building their own home was to have complete say and control over the design, look and feel of their new property. 53% (10 people) also believed that this was a more cost-effective way to create a home than they could afford to buy otherwise.

Interestingly for brokers, when asked what tips they would give potential self builders, one person wished they’d had a “clearer understanding of how stage payments work” to avoid cash flow nightmares. This shows what a difference an informed intermediary can make when it comes to helping their clients through their mortgage journey.

Get in touch.

We’ve been supporting intermediaries with self build and renovation cases for many years, with an expert support team and manual underwriters on hand to help.

E:             bdt@suffolkbuildingsociety.co.uk     

T:             0330 123 1073    

W:           www.suffolkforintermediaries.co.uk

All details and lending criteria correct as at 19 September 2022.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.