Date added: 18 October 2011
Self builders have been advised by the Building Societies Association (BSA) to contact smaller local lenders to discuss finance for their projects.
Colette Best, mortgage policy advisor for the BSA suggests that approaching large institutions for finance could be a big mistake with the possibility of a proposal being declined by automated systems before an applicant has even had the chance to speak to anyone.
Despite the fact that self build accounts for a fifth of new homes built in Britain and 1 in 3 people saying they would self build within 5 years if finance was available Ms Best said: "Self build is still considered quite specialised so a lot of the major lenders won't offer these products. It is a good idea to speak to your local building society who are more likely to be willing to lend to you for self-build."
Ms Best also advised that the project should be well planned out before seeking finance and that self builders should consider their finance requirements when the build is completed "It is a good idea to discuss with your lender what options you have when rolling off your self-build mortgage onto a traditional product once it is finished because chances are that it is going to be a bit cheaper " and, she adds: "The good news is that when you are finished, you are going to have a really great loan-to-value on your property and you are going to be in a really good position to get a mortgage on that finished property".
With finance being one of the main barriers to self build, advice like this from the Building Societies Association is very useful and hopefully signifies the start of a shift in perception.