Building your own home is a monstrous task, which can get even more alarming if you do not have a plan for correctly financing the project. Nowadays it is possible to opt for a specialized financing option for self-build project so you do not lose out with high interest rates. Self build mortgages are highly appropriate for these types of projects. However, here are a few top reasons to help you fully understand the benefits of this type of mortgage scheme.
Properly structured fund release program for self building owners
Self-build mortgage programs are structured in a way that the lender can release funds at various stages of the project. This means that depending on the lender’s terms and conditions generally the money is released in sections or tranches. The first slot is usually during the time when the land is bought. Further, the funds are released when you start laying the foundation of the home and with each major step of the process. This reduces the overall risk and interest rates for the homebuilder.
Types of self build mortgage options available in the market
There are two types of self-build mortgage options. This depends on the way the money is released during the home building process. Many lenders release the money when the part of the building process has been completed and a valuer is sent to the site to make a correct assessment of the value of the work done. However, another type of option is the mortgage money is released at the beginning of each part of the building process. This is especially crucial if you do not have the cash available from the very beginning of the building project.
Finally, remember that the self build mortgage programs have a higher interest rate than the standard mortgage options. Therefore, if you are not self-building or you are building with the intention of selling, you can choose some other options such as buy to let mortgages.