financing your home

financing your microhome

At the initial stages of any homebuilding project, a common stumbling block comes in the form of finance. Many potential Self Builders aren’t sure what their options for financing their build are, and can be put off committing to their plans.

Whilst it may seem daunting, there are a number of ways to help you finance your Microhome and assessing these options to find the most suitable route for you is fundamental to achieving your homebuilding dream.

At an early stage, understanding what funds you have available is key to ensuring your house designs align with your budget, which is why we have partnered with Buildstore Mortgage Services Limited.

BuildStore is the UK’s leading mortgage brokerage specialising in mortgages and finance, designed specifically for homebuilding projects. Their specialist mortgage advisers will recommend and tailor borrowing solutions to your financial circumstances, design and build specifications, and payment schedule.  They fully understand Micro Homes processes and the solutions required for the various projects we design.

Buildstore understands the complex and specialist experience required when financing self build houses using offsite manufactured structural timber frame systems. They have built solid relationships with lenders and created more than 70 exclusive mortgages, designed specifically to solve the common issues faced by individual homebuilders.

These unique funding solutions set them apart from other mortgage brokers, and this allows us to help many customers who otherwise may not have had the chance to build their dream homes.

HOW DO SELF BUILD MORTGAGES WORK?

Self build homes are built and paid for in stages, and you’re unlikely to be able to draw enough from the value of your plot alone to cover all of your costs. Self build mortgages therefore release funds in stages as work progresses, rather than as a single payment.

There are two types of self build mortgage: valuation-based and cost-based. The two types of deals have very different features, so you must understand how any mortgage you choose will work, particularly how the lender decides how much money they’ll give you at each stage of your build.

VALUATION BASED MORTGAGES

Valuation-based stage payment mortgages release funds after each stage of the building process is completed and a lender’s valuation shows an uplift in value. This means you won’t know how much money you’ll get after you’ve completed each stage, so there is a real risk you won’t get what you need, which could bring your build to a standstill.

These mortgages may be more suitable for traditional building methods, where the build costs are more evenly spread across the build, where you already own your plot, so already have some built-in value or where you have more cash of your own available to put into your build.

COST BASED MORTGAGES

Cost-based stage payment mortgages provide guaranteed stage payments based on your build costs. Funds can either be released before or after each build stage, depending on your payment schedule. There are no need for valuations during the build, so stage releases can be agreed upon as part of your mortgage application.

This type of mortgage is exclusively available from BuildStore and works particularly well with structural timber frame systems and Micro Homes,  as you can get money from the lender towards the cost of your building system before it’s even on site.

HOW MUCH CAN YOU BORROW?

How much you can borrow depends on your financial circumstances. Like any mortgage, lenders will assess your income and outgoings to calculate what you can afford.

For a valuation-based self build mortgage, the money your lender will release is typically restricted to 80% of their assessment of the value of your site at any time – you won’t know how much is available to you until you ask for more money.

With BuildStore’s higher lending percentages, you could borrow up to 95% of your costs, (100% if you already own your plot) with a maximum of up to 85% of the expected end value of your home. What’s more, you’ll be told as part of your mortgage application how much you’ll receive at each stage of your build- guaranteed.

THE BUILDSTORE DIFFERENCE

• Specialist knowledge and expertise
• Competitive interest rates
• Exclusive products and lenders
• Interest only payments during the build
• Guaranteed cost based stage payments to coincide with your costs
• Ability to stay in your current home until your new one is complete
• Tailored cash flow to suit your build and payment schedule
• Borrow up to 95% of your land and build costs

For more information and expert advice on how to fund your homebuilding project, click here to be connected directly through to the microhomes lending team at Buildstore, use the form below, or call Buildstore on 0345 223 4888 (Quote ‘Microhomes’) and ask about funding for your new home.