Article by James Smith
We all dream of owning a house, a place which we can call our own. But, this dream is fast turning into a nightmare for people as a result of soaring property prices. They are the proverbial dark cloud in a bright blue sky. In such a scenario, self-build mortgages have come as the true savior of dreams.
As the name suggests, a self-build mortgage helps you build your home. Getting down to the brass-tacks, it aids you in financing the construction of your own house. A self-build mortgage lends you the money in installments. The initial monetary installment is given to purchase the land you are going to build your house on. The payments made to the borrower are in sync with the step-by-step process of building the home. At each stage you get the requisite finance needed to build the property. It is of paramount importance that you have a fair idea as to when the payments are going to be made; whether at the beginning of each stage or ate the end of each stage. This will allow you to plan your finances in a more effective manner.
As in all mortgages, the lender has the final say with regard to the amount that can be borrowed. Generally, in the case of self-build mortgages you can get not more than 75% of the land cost, or approximately 60% of the building costs. Self-build mortgages are niche mortgages and for this reason the rate of interest charged by lender is a little higher than normal. But more and more lenders are getting into the act, as the demand for self-build mortgages increases. Major money lending organizations like, HSBC, etc are now offering this type of mortgage at competitive rates.
A word of caution: If you are planning to build your house yourself, then be ready for some polite refusals from moneylenders. A house that is professionally designed and built for you by professional builders finds more of a support as far as taking out a mortgage is concerned. This is, of course, apart from the regular checks on credit history and the personal background of the individual.
Self-build mortgages are becoming increasingly popular because of the ancillary advantages that come with it. It is estimated that homes built with the help on this mortgage are worth around 25% to 30% more when they are complete compared to the cost incurred in building them. In some countries you can save a lot of money on the stamp duty if you take self-build mortgages.
As is very obvious, the key requirement for building a house is land. Finding just the right kind of location to build your dream house is very difficult. This is because of the rise in cost of land and the limited number of sites that are available.
Self-build mortgages have eased many of the difficulties associated with building a house. So get one and build your house.
About the Author
James has been writing about mortgages for many years and offers information on the different types of mortgages available from the web site http://www.1mortgagesuk.co.uk