BuildLoan and Nottingham Building Society (BS) have launched three ‘cost-based’ mortgage products for people building their own homes.
The products offer up to £600,000, and 80% of a client’s building costs, with interest payments coming into effect once the build has started.
The first product has an initial rate of 3.8% for two years, and a completion fee of £1,499, while the second has a pay rate of 5% and no completion fee. Neither products have application fees.
“These products take away the cashflow risk associated with some self and custom build mortgage deals which base the stage releases on the value of the site – agreeing the releases based purely on cost, takes away this risk and gives clients a huge amount of confidence that they can press on with their build,” says BuildLoan head of product development and underwriting Chris Martin.
The third product has a fixed rate, with initial pay set at 3.74% until May 2023, at which time it will revert to 4.24%. Completion fee for the product is £1,499.
Funds are released in stages across the full product range and are agreed at application stage. Funds are based on the cost of each element of the work.
“Our lending is now linked to the cost of each stage of work, with a guaranteed stage release pattern agreed at application. This cuts out the need for interim valuations, taking away the risk of a customer potentially not getting the funds they expected,” says Nottingham BS head of intermediary sales, Nikki Warren-Dean.
“There can be no underestimating the peace of mind confirmed cashflow can bring – in fact it can be key to a successful and efficient self-build project,” she adds.
