"This sector represents an opportunity to assist clients who are eager to embark on what remains a unique homebuilding journey, complete with its own set of financial challenges and implications."
Unlike buying a pre-built home, self-build projects offer individuals the opportunity to be involved in the design and construction process, ensuring that every detail aligns with their vision and budget, and is tailored to their specific needs and preferences. For mortgage intermediaries, this sector represents an opportunity to assist clients who are eager to embark on what remains a unique homebuilding journey, complete with its own set of financial challenges and implications.
Self-build mortgages differ significantly from traditional residential mortgages. Rather than releasing the full loan amount at once, funds are typically released in stages as the project progresses. This staged payment approach is designed to cover costs as they arise during construction, such as purchasing land, laying foundations, building the structure, and completing the final touches. The flexibility of self-build mortgages allows borrowers to manage their finances more effectively throughout the building process, reducing the risk of overspending.
One of the primary benefits of a self-build mortgage is the potential cost savings compared to purchasing a pre-built home. By managing the project themselves, or hiring contractors directly, self-builders can often achieve significant savings on labour and materials. Additionally, VAT refunds on certain building materials can further reduce costs, making self-build projects more financially accessible.
Lenders who are specialists in what remains a complex funding arena play a key role in not only facilitating this type of finance but in also supporting borrowers and intermediary partners to ensure they are aware of some unique requirements and in the provision of tools which can help simplify the entire process from start to finish.
In order to bolster this support network, we recently embarked on a strategic partnership with The Modern Builder (TMB), a leading platform in the self-build and modern methods of construction (MMC) marketplace. Through this partnership, we are committed to providing access to TMB's comprehensive platform, which consolidates all necessary suppliers and resources into a single, user-friendly interface. This integration not only simplifies the self-build journey but also minimises the potential for errors, particularly in budgeting and cost calculations and in providing access to CGI-rendered plans, all of which are invaluable for self-builders.
These resources help to ensure that clients are well-informed and prepared at each stage of their project, reducing the likelihood of unexpected financial setbacks. For mortgage intermediaries, these tools enhance their ability to provide accurate advice and support, positioning them as trusted partners in the self-build process.
As more clients explore self-build options, mortgage intermediaries who are knowledgeable about self-build mortgages and the available resources will be better equipped to meet the needs of this expanding market. Helping to bridge the gap between architects, suppliers, contractors, lenders and self-builders will offer greater opportunity to ensure that every aspect of an individual self-build project is coordinated efficiently. It could also potentially open up valuable referral agreements and ancillary revenue streams along the way.
Looking ahead, the self-build marketplace will never be a dominant force within the wider mortgage market but opportunities are emerging for mortgage intermediaries to expand their services and better support clients in creating their dream homes. And by leveraging these kind of innovative partnership, advisers can provide comprehensive, informed guidance, ensuring that their clients' self-build journeys are both smooth and successful.
