Getting the best self build mortgages rates

Crafting a custom built property takes careful planning, cautious spending and the patience of a Saint but there’s something to be said about stepping back and appreciating your hard work once complete.


The problem a lot of self-builders face is the lack of lenders willing to loan, often because of the increased risks associated with self-build mortgages. 


Lenders that do specialize in this type of borrowing can charge higher rates though, leaving many confused about where to turn for the most affordable self-build mortgage rates.

What can affect the interest rate for a self-build mortgage?

The size of your mortgage

The LTV (loan-to-value) of the mortgage you are applying for can affect the interest rate and usually the lower the LTV, the better the interest rate.


Some lenders can be reluctant to lend LTV (loan-to-value) rates above 80% for self-build mortgages and those that do may charge higher interest rates. 

Deposit

The majority of self-build lenders will require a higher deposit between 25-50%. By increasing the size of your deposit, you lower the LTV of the mortgage and thus the risk to the lender.


This could allow you access to lower interest rates and would also mean that you own more equity. 

Income

Most lenders will loan up to 4.5 times the borrower’s income and you may find that the higher your income, the lower the interest rate. 


The source and regularity of your income can affect the rate for a self-build loan too. Most lenders prefer their borrowers to have a dependable income, so if you’re self-employed, it can be a good idea to work with a broker with experience in this niche area. 


Ask our advisors to recommend the most suitable broker for you here.

Age

Your age can also affect the rate you’re offered on a self-build mortgage as some lenders have age restrictions, making it difficult for borrowers nearing retirement. 


Lenders that have upper age restrictions may require older borrowers to have a larger deposit or pay a higher rate of interest on their loan

Property type

The materials you use as well as the design of the building can also affect the interest rate. 


If the lender decides that the completed project could be difficult to re-sell in the event of repossession, they will deem the loan as a higher risk.

What are your options when it comes to finding a good interest rate?

Finding the best rate relies heavily on access to current lending information, something most people don’t have. To get around this you have two options.


The first would be to carry out the lengthy process of comparing numerous self-build interest rates yourself, using comparison sites and contacting lenders directly.


The second would be to work with a mortgage broker that specialises in self-build mortgages. The brokers we work with have ease of access to hundreds of deals across the UK.

Searching for self-build interest rates alone

Online comparison sites can be quick, providing a broad overview of self-build interest rates. 


The problem is that:


  • Not all lenders feature on comparison sites

  • Some lenders only give their rates directly 

  • Not all comparison tools are updated in real time

  • The quotes provided by comparisons sites aren’t always accurate

Cut the confusion and ask an expert 

As opposed to scanning through comparison sites, seek a dependable source of information. 


Our mortgage brokers work hard to find the best self-build interest rates in the UK and can manage the mortgage process from start to finish on your behalf. 


Filling in paperwork, advising you on the mistakes to avoid when applying for a mortgage and checking the terms and conditions of your agreement are just a few of the ways a specialist mortgage broker can help you. 


Call us on  023 8023 5555 and we’ll connect you to the most relevant member of our team.


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