A self build mortgage lets you borrow money to build your own property. So if you're wondering 'Can you get a mortgage to build a house?' then the answer is 'Yes'.

If it's your dream to build your own home, a regular mortgage won't help. But a mortgage to build a house is a specialist mortgage especially for self-builders.

You might already have lots of ideas about what your new home will look like and where it will be, but the very first step needs to be arranging your finances. Without money, you won't be able to make your dream a reality.

How to find a self build mortgage

If you plan to build your own house, you'll need to look for self build mortgages. Most traditional deals can only be used for houses that have already been built.

You'll probably find that for a self build mortgage, UK building societies and smaller banks are a better bet.

How do self build mortgages work?


Self build mortgages transfer money to you in stages as you build your house. This is very different to buying an existing house as you'll receive a lump sum for that kind of loan.

With a self build mortgage, lenders like to make sure they're minimising their risk. They also want to see that you're spending money in the way you planned to, so you don't run out before the project's finished.

Usually, you'll have money released at specific times. This could include when you:

  1. Buy the land

  2. Build the foundations

  3. Construct the house's shell

  4. Finish the plastering, plumbing and electrical wiring

  5. Complete the project and get the home valued.


Before you do your self-build, you'll need to think about whether you want to do a lot of the work yourself, or employ people to do it for you. If you're skilled and you want to do a lot of the work yourself, in partnership with plumbers and electricians where needed, this can be the cheaper route.

But if you don't work in the trade, you might want to take on the role of managing your surveyor, architect and tradesmen. If you don't want as much involvement as that, you can get a contractor to manage the whole project for you. Your lender will confirm whether you can factor this cost into your self build mortgage.

When do you get your mortgage to build a house?

This depends on what kind of self build mortgage you're getting.

Some house building loan options offer arrears stage payment. That means that you receive the self build finance after you've completed each stage. You'll have to prove how much that stage cost. For this kind of self build mortgage you'll need to find a way to pay up front for materials and costs.

The other type of mortgage to build a home offers advance stage payment. This means the money gets released to you by your lender before you need to pay each bill.

Either way, you'll need to think about financing your project as early as possible in the process. This'll mean you can make arrangements and budget accurately.

What kind of deposit do I need for a self build mortgage, UK wide?


If you're building your own home, lenders usually need a larger deposit from you.

Every mortgage has a loan to value (LTV) which is the percentage of the property's value the lender will cover.

For example, if the LTV was 75%, you'd need to put down the remaining 25% as a deposit.

Self build mortgages often have a separate limit on how much you can borrow for

  1. buying the land, and

  2. your projected costs for building the house.


For example, they might let you borrow 75% of the total cost of the land, and 85% of the projected costs for building the house.

What are the rates like on self build mortgages?


Self build mortgage rates - including interest rates and any fees - affect how much your mortgage costs. They're usually higher on a self build mortgage than on a conventional mortgage.

It's important to find the best self build mortgage to suit your needs.

The self build mortgage comparison at the top of this page lets you compare mortgage products from self build mortgage lenders . The comparison covers LTV, rates and overall costs. Once you've chosen one, you can check your eligibility for that particular self build mortgage by clicking the button on the right.

If you're struggling to find the right mortgage for you, you could speak to a self build mortgage broker to get some help.

Here are all the costs of mortgages and buying a home.

What are the benefits of a self build mortgage?

If you're getting a mortgage for self build, you're building your own home which is a dream come true for many people. It means you get to choose everything about it - where it is, what it looks like, how big it is and the interior features. It's completely bespoke.

One of the best things about building your own home and using a self build mortgage is that you don't have to pay stamp duty on the home. This means you could save thousands of pounds. You don't pay any stamp duty on the building costs, or on the property's value when it's complete - you just pay stamp duty on the land itself. Even then, you only pay stamp duty if the land cost you more than 125,000.

The stamp duty threshold has been temporarily increased to 500,000 during the COVID-19 pandemic until March 31, 2021. This means that you will not have to pay any stamp duty for the first 500,000 of the purchase price of your home.

The other benefit is that your home is likely to be worth a lot more when it's finished than what you've spent on building it and buying the land.

How much can I borrow through a house building loan?

This will depend on several factors including your income, your self build plans, your credit history and your outgoings.

We don't have a specific self build mortgage calculator, but our standard mortgage calculator" can be used as a rough guide. Use this in conjunction with our comparison table at the top of this page.

How else could I fund a self build home?

A self build mortgage might not be right for everyone. So you could think about whether you have any other options to fund the build of your new home.

Here are a few ideas:

  • Saving. If you've got a lot of savings it could be a good idea to use them as a cost effective way to build your home.

  • Remortgage. If you've got a lot of money tied up in your home, you could remortgage to release some funds.

  • Personal loan. You could get a personal loan, although this would only be up to 25,000.

  • Secured loan. You could get a loan that's secured against something else you own, like another property. But if you don't make your repayments, you risk losing the asset that you've secured the loan against.

  • Bridging loan. This could be a helpful way to get some short-term funding to cover your land and building work. This might mean you could stay in your existing property while the work's done. When the project's finished, you could then get a traditional mortgage to repay the loan. Bridging loans usually have high interest rates so research this option thoroughly.

What else should I think about before taking out a self build mortgage?

Before you go ahead with your self build, you'll need to know:

  • Where you're going to live while you build your new home. Will you move in with friends or family? Will you stay in your existing home? Will you rent? You'll need to consider whether your plan will affect your budget. Renting, for example, can be expensive.

  • What build system you're going to use. It'll need to comply with current Building Regulations and some lenders don't allow certain types of construction methods. So think about this carefully and consider your options.

  • Your estimated build cost. Lenders will need to know about this. Some want you to stick within a specific budget. Others will want costs to be confirmed by a quantity surveyor. It's always an idea to include some contingency within your budget.

  • Other costs you might not have considered. For example - fees for construction design and costs, or demolition and site preparation. There's also planning consent, land purchase fees, and project management to think about, as well as other factors.

Self build mortgage FAQs

Q

Is it better to buy an existing house?

A

Building a home can work out much cheaper if things go well but could involve much more work and risk. Here are the pros and cons.

Q

How do I build my own home?

A

It is important to set a budget, work out the cost and plan the timescale carefully. Here is everything you need to know about building your home.

Q

Do I need planning permission?

A

Yes, you have to get planning permission to be legally allowed to start building. Here is how to get planning permission.

Q

Can I switch to a better deal after the house is finished?

A

You could switch to a normal mortgage with a lower APR, but make sure your self build mortgage does not charge an early repayment fee.

About our mortgage comparison

Q

Who do we include in this comparison?

A

We include mortgages available through our independent broker, LDT Finance. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.

Last updated: 11 September, 2020