Summary:
Self Build property development finance usually describes finance provided for people who wish to build their own homes or convert or enlarge their own homes. It can apply both to people who physically build themselves and to those who employ builders and project managers.
Although self build finance may appear to be commercial lending, it is a specialised type of residential mortgage. As the lending is given to those who are planning to live in the property, a self build finance broker will need to be qualified differently as the mortgage will be regulated by the FSA. Commercial lending is not regulated in the same way. Your broker will be able to tell you if they are able to advise you or recommend someone who can.
The main difference between an ordinary residential mortgage and a self-build mortgage is that the funds will be drawn down in stages instead of all at once. Usually a third-party surveyor or building inspector will have to sign of the completion of each stage of the build before the next stage of the mortgage can be drawn down.
Generally lenders may offer between 25% and 80% of the value of a building plot and between 65% and 95% of the cots of building. It is often best to look for some sort of flexible borrowing and different lenders will take a different view if you are staying in an existing mortgaged property whilst the house is built.
This is an area for sensible advice and careful budgeting.
If you are a small property developer, you are more likely to need property development finance.
