If you are planning to build your home on your own there are broadly there are three ways of financing a project:
- Use your own savings (if so, you can probably stay in your existing home until the new one is built). Sometimes people are able to supplement their own savings by arranging an informal loan from family or friends.
- Sell your current house to raise the finance you need, or use your existing property as surety for a loan to fund the new house. If you have to sell your current home you might then live in a caravan on site, or with relatives, or rent a house while the new home is built.
- Borrow the money you need by taking out a mortgage on your proposed self build home. Usually you can only borrow about 75% of the land cost, and 60% of the build cost, so you will still need a sizeable deposit.
You need to assess your situation and work out which method or combination of methods will work best for you.
Budgeting can make or break a project. The more accurate your estimates and calculations, the more likely you will build your dream home without any crippling overspends.
If you are hoping to build as part of a group self build scheme you may be eligible for a loan under the Government’s Custom Build Serviced Plots Loan Fund. To be eligible there has to be at least five homes being built together.
Community-led housing schemes are also eligible for grants towards some professional fees.
Some of the bigger lending institutions may also be worth approaching, although in the current economic climate it’s not easy to get finance for group self build schemes.
The Government has confirmed that self and custom builders are exempt from paying the Community Infrastructure Levy (CIL) that is normally charged when planning permission is granted for a new house. It has also confirmed plans to exempt self builders from paying Section 106 (S106) Affordable Housing Contributions.