frequently asked questions

This is a really interesting question, as lots of lenders would say no to this scenario, as they would want to finance the project from the ground up and would decline if the project had already commenced.  

At BuildLoan, we can secure funding for projects no matter what stage they are at.  We appreciate that sometimes self builders will try to go it alone and then realise that they need some help. 

Your clients will need to have site insurance in place prior to completion as a condition of their mortgage.  They will also need suitable certification of the build.  This will either be a Structural Warranty or an Architects Certificate.  The arrangements will need to be evidenced before the mortgage commences.

Where the client chooses to have an Architect’s Certificate, rather than a Structural Warranty, the lender will require an additional Technical Audit Inspection at each build stage, in which case Technical Audit fees will also be required.

Lenders will assess affordability based upon income, expenditure and the length of the mortgage term.  If we were to calculate the equivalent maximum lending limits, it would equate to between 4.25 and 5 times the applicants’ incomes, subject to affordability.

Lenders will generally need to see a minimum of 2 years business accounts for self-employed clients.  There may be occasions where 1 years accounts plus a satisfactory projection is acceptable.

At BuildLoan, we work closely with our extensive panel of mortgage lenders.  Some will base lending amounts on profits and others will use salary and dividends. From the details that you provide for profit, salary and dividends, we will research and identify which lenders are most appropriately suited to the requirements of your clients.

Yes – where your client is building an entire new home, funds will be release in up to 6 stages – linked to the cost of the stage: Buy the land, Foundations, Wall Plate/Frame Erected, Wind & Watertight, First Fix, Second Fix/Completion.  Not all projects fit this pattern, particularly conversion, renovation or extension projects, so we’ll try to tailor the stage releases to your clients’ needs.

A cost based mortgage mortgage is where funds are released based on each stage of build costs, rather than being linked to a site valuation.  This removes the risk of down valuation and your clients receiving less money than expected from the lender.  Cost based mortgages offer guaranteed stage payments irrespective of valuations.  Stage payments can either be in arrears or advance with a cost based mortgage.

A valuation based mortgage is where funds are released subject to a valuation being carried out by the lender.  This type of mortgage relies on a sufficient uplift in the value of the property at each stage of the build.  Valuation based mortgages carry a risk of down valuation which means your clients may receive less money than expected for the next stage of their project. This can cause serious cashflow problems.

All of our lenders offer interest only during the build, which often really helps with the clients cashflow and budget, as they will have ongoing living costs during the build period.  When the build is complete, the clients are able to move into their new homes and the mortgage would then revert to a capital and interest, repayment mortgage at that stage.  They will also be able to look at product transfer options at this point too.

You are responsible for the advice given.  BuildLoan will give you all the help, guidance and tools that you need to make the right recommendation in this specialist sector.  Our unique Unicus system will identify which lenders will support your clients’ project and those that won’t making your research comprehensive and your advice – robust.

The gross procuration fee paid to BuildLoan for a self build mortgage is typically 0.8% and the procuration fee that we provide to mortgage networks and clubs is typically 0.4o% and 0.35% to directly authorised brokers.  For full details click here.

We are specialists in residential mortgages for self builds, custom builds, renovations, conversions and extensions.  We also specialise in short term finance too.  Whether your clients are looking to build their dream home, or build to sell or let on any scale – a single house, a site of houses, offices, apartments or converting offices into apartments – we can help!

Yes, we have a dedicated team that specialise in short term finance, whether that’s bridging or development finance.  They are experts to talk to when your clients are looking to build a property/properties to sell on or let, on any scale.

BuildLoan’s fees are 

£95 decision in principle fee

£600 payable on issue of the mortgage offer

An Additional Security Fee is also payable to BuildLoan before the mortgage commences – this is an indemnity and build out insurance policy

Other fees 

Lender application, completion and valuation fees will be payable – specific to the product chosen

Re-inspection fees will be payable were the lender requires inspections by their valuer during the build.  These are likely to vary between £50 and £125 per inspection.

Where your client chooses to have an architects certificate rather than a structural warranty, the lender requires an additional technical audit inspection at each build stage, in which case technical audit fees will also be required.  Where a structural warranty is in place, these fees do not apply.

The process is likely to take longer than purchase or remortgage applications, as lenders require more details such as plans, planning permission, project costings and so on. 

As a rough guide, it will typically take between 6 – 12 weeks to receive an offer, although the time can be less than this as it is dependent on how quickly we receive the information needed to prepare your case for the lender and the lender service levels too.

BuildLoan’s unique Additional Security Fee Benefit Scheme and Build Out Cover is an insurance policy that allows our lenders to lend more to your customers earlier in their build, irrespective of valuations.

The Build Out Cover provides the lender with the safety blanket, that if they had to take a part built property into possession, they have the option to build out the property and therefore increase their certainty of sale without financial loss.

The indemnity policy also allows the lender to be more fluid with their stage releases, allowing them to offer higher loan to cost lending limits and tailor your clients’ cashflow requirements, providing guaranteed pre-agreed stage releases and the option of advance or arrears stage payments.

The cost of BuildLoan’s Additional Security Fee is calculated based on the amount that exceeds the lender’s normal limit – the insurable risk.  It is therefore a sliding scale, from £0 to around £000 depending on your clients’ requirements.

The average cost for the additional security fee is £1060 for an arrears stage payment mortgage and £1600 for an advance stage payment mortgage.  These figures are estimates and the actual premium payable will be calculated and provided once the build costs and proposed pattern of stage releases have been agreed with you and your client.

You are responsible for the advice given.  BuildLoan will give you all the help, guidance and tools that you need to make the right recommendation in this specialist sector.  Our unique Unicus system will identify which lenders will support your clients’ project and those that won’t making your research comprehensive and your advice – robust.

The gross procuration fee paid to BuildLoan for a self build mortgage is typically 0.8% and the procuration fee that we provide to mortgage networks and clubs is typically 0.$% and 0.35% to directly authorised brokers.