06:00 14 July 2013
A lot of people want to be able to build their dream house so it will be exactly what they want it to be. If you’re one of them, the first thing that you need to do to realise your dream is to find a self-build mortgage. This is a home loan taken out on a house that you plan to build yourself.
The main difference between traditional mortgage and self-build mortgage is that the money you borrow is given to you in stages and not as a single lump sum. This gives the lenders an assurance that you spend the money as planned thus, reducing risk on their part.
Typically, the first payment will be given to you after you buy a land. The lender will pay more when the foundations are laid and then the property is built up to eaves level.
Self-build mortgages let you save hundreds to thousands of pounds in stamp duty because there is no stamp duty on the cost of the building work. But you’ll have to pay duty on the cost of the plot of the land, which typically costs around £125,000.
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