Building your own home is likely to be the biggest expenditure you will ever make. It is therefore vital that you plan your finances carefully, so that you do not get any unwanted surprises towards the end of your project.
Many lenders now offer mortgages to self builders, so shop around and make sure you get the deal that is most suited to your needs. The most common self build mortgages release the agreed loan on a stage basis.
Each mortgage package varies, but a general indication of the funding available from a lender is 80% of the value or purchase price of the plot and up to 95% of the value of the completed property. These figures are only illustrative, for individual advice relevant to your particular circumstances please source expert advice.
In addition to the land, construction and material costs, there are several other costs to budget for. The following is intended as illustrative examples only and should not be used in place of up to date advice from a professional.
Stamp Duty Land Tax
This was introduced on 1-12-03. It replaces the old stamp duty on purchases of flats, houses and other UK land and buildings. (Full details from www.hmrc.gov.uk) Residential rates in most areas are:
Zero £0 - £150,000
1% Over £150,000 - £250,000
3% Over £250,000 - £500,000
4% Over £500,000
Your mortgage lender will charge you to conduct an official valuation of your plot. As this belongs to them, you should also consider commissioning an independent professional valuation or survey. Your mortgage lender will also charge you for re-inspections before the release of each stage payment.
If your plot is not ‘serviced’ you will need to pay for the connection and infrastructure of water, drainage, gas, telephone and electricity to your property.
If you engage an architect or other building professional you will incur professional fees. Planning permission and Building regulations will also require payment.
Your solicitor or conveyancer will charge. Reserve Funds. It is very wise to retain a proportion of your budget as a contingency fund. If one part of your project goes over budget, you can then use this money to cover the cost without delaying the whole project.
We strongly advise you do not use money which is ear-marked for later stages. Robbing Peter to pay Paul could leave you with a beautiful house that you cannot afford to furnish!