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Self Build & Renovation Mortgages

More people choose to create and construct their dream homes these days so self-build and renovation mortgages are becoming increasingly popular.

We have plenty of experience of matching self-builders and renovators to their ideal mortgage so you’re in safe hands. You don’t need to have a background in building or construction. Just the persistence, passion and finances to see your project through… and a dash of good luck!

Why we’re a great choice

The Melton is one of only a few lenders who will lend to purchase the land with outline planning permission, as well as releasing funds in advance of each build stage – we understand the entire process from start to finish which means you’ll have our help and support at every step.

How do self-build mortgages work?

With a self-build mortgage, funds are generally released in stages as the project progresses, rather than in a lump sum.   As a guide, these stages tend to fall into six benchmarks:

  • Purchasing the land
  • Initial project costs and laying foundations
  • Construction to wall plate levels (and timber frame erected if appropriate)
  • Building made wind and watertight
  • First fix and plastering
  • Second fix through to completion.

Releasing funds in stages helps make sure you don’t run out of money halfway through the project!

At the Melton, we can offer various options:

Our Family Assist Self Build Mortgage allows parents to provide the deposit and have it returned as a final stage payment on completion of the build.

With our Self Build Advance Mortgage, you’ll get money in advance of each stage, which is very helpful for cashflow.  We will instruct a local valuer to inspect the work at each build and payment release stage until your building is complete. We also offer a Standard Self Build Mortgage which provides stage payments in arrears.  Why not compare both here?

If you’re keen to be green, you might also be interested in our Eco Mortgage with a special discounted rate that recognises investment in energy efficient features.

What’s more, you can have the mortgage on an interest only basis during the build – this is particularly helpful if you’re living in rented accommodation or staying in your existing home with a monthly mortgage payment.

At the end of your self-build project you can transfer to a standard mortgage with us on a capital and interest repayment basis, without incurring early repayment charges.

You can also pay a lump sum off at the end of the build when you complete a scheme transfer, and we’ll waive the early repayment charges. This is especially helpful if you’ve got savings kept aside for contingency for the build or if you have reclaimed VAT that you want to use to reduce the mortgage balance.

Once a mortgage application has been approved, the Melton will agree a schedule of payment drawdowns with you. Our expert team will explain every part of the process, from deciding which is the most suitable option to what happens when your dream home is built.

Product Fee stated below is the application fee only. A Completion Fee, a percentage of the loan amount, is also payable. We offer a range of self build products but, from time to time, some of these may be temporarily unavailable.

Mortgage Product Maximum Loan to Value Initial Rate Followed by our Standard Variable Rate The overall cost for comparison Product Fees Deposit amount
Melton Standard Self Build 50% 3.49% 4.99% 4.9% APRC £500

Based on a £231,265 mortgage, secured by first charge on your main residential property, repaid on an interest only basis over a 25 year term: 36 monthly payments at a variable rate of 3.49%, (£672.60) £24,213.60. 264 monthly payments at standard variable rate (currently 4.99%), (£961.68) £253,883.52. Valuation fee on property of £320,000, payable when you apply £495 (scale applies). Application fee payable when you apply £500. Completion fee 0.50% of the loan amount payable at time of legal completion £1,156.33. Reinspection fee of £80 required for each stage release £320. Title Insurance fee payable at the start of the mortgage £78.40. Telegraphic Transfer fee payable when you apply £25. Solicitors fees payable to your conveyancer (estimated) £360. Mortgage Discharge Fee payable at the end of your mortgage £150. Loan amount payable at the end of your mortgage £231,265. Total Amount Payable £512,446.85

Melton Advance Self Build 75% 4.59% 4.99% 5.2% APRC £500
Melton Self Build ECO 75% 4.09% 4.99% 5.0% APRC £500
Family Assist Self Build 75% 4.59% 4.99% 5.1% APRC £500
Short Term Self Build 75% 4.59% n/a 5.1% APRC £500
Melton Standard Self Build 75% 4.59% 4.99% 5.1% APRC £500

Top tips for self-builders

  • Always work with a contingency fund – at least 10% of your overall budget.
  • Choose a lender with experience of this type of specialist lending and who offers a personal service. At the Melton, we look at each case on an individual basis and provide manual underwriting.
  • Be clear about your expectations. You might be building your forever home or creating something to sell in the future for profit. Remember you can reclaim VAT on much of your materials, giving you 20% back on allowable costs.

Choosing to self-build can often result in a house that’s substantially cheaper than an existing property. To start with, stamp duty should be low as tax is due only on the cost of the land – not the value of a completed house.

If you’re looking to renovate instead, you can benefit from the same stamp duty and VAT incentives.

Find out more at our Self Build Hub.

Got a particular project in mind?

We are happy to talk to you about every kind of self-build or renovation project. Perhaps you’re looking for something a little out of the ordinary or an ambitious conversion.

You’ll find our friendly team full of practical advice and the best tips to see your project through to success.

Take a look at our current specialist mortgages above: you’ll need to be 25 or older to apply.

 

Next steps

We have plenty of experience of self-build and renovation mortgages, so get in touch today for a chat and a quote. Call us on 01664 414141 to fix a convenient appointment.

You’ll find more information at our Guide to Self Build Mortgages.

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