| How funds are released | In stages, after each build milestone |
|---|---|
| Release basis | Arrears (after stage) or advance (before stage) |
| Typical land LTV | Often up to around 50–75% |
| Typical build cost funding | Often up to around 75% of costs |
| Requirements | Planning permission, costings, warranty or architect sign-off |
| Regulation | FCA-regulated if you will live in the home |
Who is this for?
- Individuals building a home to live in on their own plot
- Custom-build buyers on serviced plots
- Owners replacing an existing house with a new one
- Buyers converting a barn, chapel or commercial building into a home
How does a self-build mortgage work?
Instead of a single lump sum, the lender releases money in stages. A typical pattern is land purchase, foundations, wall plate, watertight, first fix and completion. A surveyor usually inspects the work before each release.
During the build you normally pay interest only on the amount drawn so far. Once the home is complete, the loan usually moves onto a standard repayment mortgage, or you remortgage to a mainstream lender.
Self-build mortgages are offered by fewer lenders than standard mortgages, mainly building societies and specialist lenders. Criteria, stage schedules and pricing differ widely, so the right fit depends on your plot, design and how you plan to manage the build. Some lenders also offer self-build products to buy and renovate a home that is currently uninhabitable.
What is the difference between arrears and advance stage payments?
With arrears stage payments, the lender releases money after each stage is finished and valued. You must fund each stage first, so you need more cash upfront. With advance stage payments, money is released at the start of each stage, which helps cash flow.
Advance products are less common and may have stricter criteria. Your choice affects how much of your own money you need and when. We map the payment schedule against your build programme before recommending a lender.
How much deposit do I need for a self-build?
You usually need a meaningful deposit for the land and a share of the build costs. Many lenders lend a proportion of land value and a proportion of build costs, often up to around 75%. Exact limits vary widely.
Many self-builders use equity from their current home, savings, or the proceeds of a sale. Build a contingency of at least 10–15% for overruns. Running out of money mid-build is one of the biggest risks of self-building.
What do lenders need before they will lend?
- Full planning permission, or at least outline consent for a decision in principle
- Detailed plans and a costed schedule of works
- Building regulations approval
- A structural warranty, or architect's certificates throughout the build
- Evidence of who will manage the build: a main contractor, project manager or you
- Proof of your deposit and contingency funds
Lenders also check that the finished value supports the total borrowing.
Who manages the build, and does it matter to lenders?
Yes, it does. Lenders want confidence that the project will be finished to standard, on time and within budget. How you manage the build affects which lenders will help and on what terms.
- Main contractor: one firm builds the home under a fixed-price or cost-plus contract. Lenders usually see this as lower risk.
- Project manager: a professional coordinates trades on your behalf.
- Self-managed: you hire and manage individual trades yourself. This can save money but needs time, skill and a larger contingency.
- Kit or package home: a supplier provides the structure, sometimes with installation.
Whatever route you choose, keep detailed records of costs and invoices. Lenders and surveyors will ask for them at each stage.
What are the risks of self-build finance?
Self-build projects can face delays, cost overruns and contractor problems. If costs rise, the lender will not usually increase the loan automatically. You may need to cover the gap yourself.
You may also need somewhere to live during the build. That could mean paying rent or a separate mortgage at the same time. For developers building to sell or let, development finance is usually more suitable than a self-build mortgage.
As self-builders, you may be able to reclaim VAT on eligible materials through HMRC's DIY housebuilders scheme. Check the current rules with HMRC or your accountant.
How we arrange it
- Free 15-minute call to review your plot and plans
- Budget and stage-payment plan agreed
- Lender selection and decision in principle
- Application, valuation of land and finished scheme
- Stage releases managed through to completion
Example cases
Illustrative examples based on the type of case we arrange. Not specific clients; every case is different.
£650,000 self-build in Surrey funded in stages on a plot already owned
£380,000 self-build loan in Cornwall covering plot purchase and build
£240,000 conversion mortgage for a barn in the Scottish Borders
From the blogSelf-build mortgages: 6 things to get right before you buy the plot
Read the articleFrequently asked questions
Can I get a mortgage to build my own house?
Yes. Self-build mortgages are offered by a smaller group of lenders, including some building societies. They release funds in stages as the build progresses. You will need planning permission, detailed costings, a warranty or architect supervision and a deposit. Lenders check that the completed home will be worth enough to support the loan.
Can I get a self-build mortgage without owning the land?
Yes, many self-build mortgages can fund part of the land purchase as the first stage. You will usually need a larger deposit for the land than for a standard purchase. Lenders will want to see planning permission, or at least a clear route to it, before releasing funds.
Do I pay the full mortgage during the build?
Usually not. During the build you normally pay interest only on the money drawn so far. Payments rise as more stages are released. Once the home is complete, the mortgage typically moves to full repayments or is refinanced. Budget for this rising cost in your plans.
Do I need a structural warranty for a self-build?
Most lenders require either a recognised structural warranty or architect's certificates issued during the build. A warranty also helps when you later sell or remortgage. Arrange it before work starts, as warranty providers usually need to inspect from the foundations.
Can I live in a caravan on site during a self-build?
Many self-builders do, subject to planning rules and the local authority. Lenders do not usually object, but you should check site insurance and any planning conditions. Living on site can save rent while you oversee the work, but it has practical challenges.
What if my build costs go over budget?
The lender will not usually increase the loan to cover overruns. You may need savings, family help or other borrowing to finish the project. Building in a contingency of 10–15% and getting fixed quotes where possible reduces this risk. Delays also add interest costs.
Is a self-build mortgage the same as a renovation mortgage?
Not exactly. A self-build mortgage funds new construction or a conversion in stages. Renovation finance may be a standard mortgage with a retention, a further advance or a bridging loan. The right option depends on whether the property is mortgageable as it stands.
Can I convert a barn or commercial building with a self-build mortgage?
Some self-build lenders fund conversions where you will live in the finished home. You will need planning consent for residential use and building regulations approval. Older or listed buildings may have extra conditions. If the property is unmortgageable at purchase, a bridging loan may be needed first.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice: up to 1% of the loan, typically £500.