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Help-to-Build mortgages

Tuesday 31 May 2022

Have you ever thought about building your own home but thought that you could never afford it, well that may now be a little easier.

Aiming to make it more affordable for self-builders to build, the Government has launched a new Help to Build in the form of an equity loan that is designed to help cover the upfront costs. This means that building your home has now become a realistic option for those who have the ambition to take on a project.

Designed to help cover the upfront costs, the equity loan is similar to the Help to Buy scheme and will be available whether it is for a made to order home, a commissioned home or a new design from scratch.

Although the details of Help to Build are yet to be fully revealed, self-builders would need a 5% deposit, with the mortgage lender providing 95% of the funding for the project. The loan can be between 5% to 20% of the total estimated costs and you can spend up to £600k on your new home (this must include the cost of the land if you already own it) and no more than £400k construction costs to build it.

The first step is finding a mortgage lender who has registered for Help to Build and will help you find a ‘self-build’ mortgage – currently either with the Halifax and a handful of specialist providers and building societies – a mortgage lender will help you with this – you will also require a 5% deposit

Once the mortgage is in place you can apply for Help to Build through the Government backed body Homes England, if you are successful you will then receive the equity loan offer which is interest free for the first five years.

During the construction of the property, you will owe the Government the 15% equity loan – your lender will release funds at the various stages and eventually your self -build mortgage will automatically switch to a repayment mortgage.

The scheme will be open for 4 years and once you accept the scheme you have three years to buy some land and build a home. The Government says it could deliver between 30-40,000 new homes a year with this new scheme.

So, if you are deciding that your next home could be a ‘new build’ project and you would like a free market appraisal on your current home, call David Phillip FRICS 01134 676 400

David Phillip, 86, Leeds Road, Bramhope, Leeds LS16 9AN w:

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