Self Build Self-Employed Mortgage

Self Build Self-Employed Mortgage 

Carly talks to us about the self-build, self-employed mortgage process.

Can I apply for a self-build mortgage if I’m self-employed? Is it hard to get a mortgage for a self-build if you’re self-employed?

Yes, you certainly could. It does depend on how you’re self-employed and what your income is, but you won’t be excluded from obtaining a self-build mortgage because you’re self-employed.

Ultimately it comes down to the key things of accurately assessing your income, getting a good understanding of your circumstances and making sure we apply to the most appropriate lender.

What if I only have one year’s accounts? Can I still get a mortgage for a self build?

Yes, although not every lender will do it. Most would typically want you to have at least two years’ records, but a number of lenders will support you with just one year’s accounts.

It’s important to speak to your advisor so we could look at which of those lenders are available, what the cost would be and whether you feel it’s beneficial to go ahead straight away. Perhaps it’s more prudent to wait a little bit longer if we’re close to reaching the two years.

How much deposit do you need for a self-build mortgage?

There’s no extra deposit requirement for the self-employed. Typically, a 20% cash deposit is needed against the cost of the whole project, purchase of land and build costs on a self-build mortgage.

What are the other requirements for getting a self-build mortgage as someone who is self-employed?

It’s the same as for employed people, there will just be more paperwork and you will have to have to satisfy your lender at each stage of the construction process.

What documents will I need to prepare to prove my income?

You’d need ID, which could be a passport or driving licence and a recent utility bill for proof of address. Then there will be bank statements to cover the previous three to six months and evidence of deposit. You’ll also need SA302 forms and a tax year overview from HMRC for the previous two years.

Can I get a self-build mortgage if I’m self-employed and have bad credit?

Getting a self-build mortgage with a bad credit score could be challenging but not impossible.

Due to the additional risk involved with self-build, lenders typically have stricter criteria for these types of loans and having a good credit score is generally one of them. We’d need to assess your credit history to find out what we could do for your circumstances.

Can I get a mortgage for a self-build as a self-employed First Time Buyer?

Yes, you could. Your choice of lenders and deals would be narrower than if you were buying an existing home, or were opting to self-build after previous home ownership, but it’s still possible.

How does remortgaging a self-build property work if you are self-employed?

There’s no difference for the self-employed. Most lenders will allow a product transfer from your self-build mortgage to a standard mortgage after the build, and they’ll waive any early repayment penalties. Some have no tie-ins, while others are more restrictive.

Otherwise, to remortgage to a standard mortgage with a new lender would be relatively simple. You’d need the documents we listed earlier. Lenders would assess your income over the last two years to determine how much they’ll lend you.

How do I apply for a self-build mortgage? How can a mortgage broker help?

Self-build mortgages could be a great tool for helping you build your dream home at an affordable cost. Mortgage brokers will assess your individual circumstances and find the right mortgage deal to fit your needs.

You’ll need to show lenders that you have planned your project carefully and rigorously, considering every stage. You will also need to show you have planning permission and building regulations approval. Put together detailed projections of costs and timeframes along with risk assessments and contingency plans.

Make sure you have a map of the site, floor plans and a rundown of how your budget will be spent. Some lenders may insist you use conventional materials and will check planning conditions to ensure you are permitted to build. It’s recommended to have the project managed by an architect or professional consultant.

You’ll also need to show your lender you have enough money to live somewhere while the work is being done. A low-cost option may be to live on site in a caravan or move in with relatives.

But building your own home is challenging enough without the added task of searching through lenders and finding the most appropriate mortgage. Use an experienced broker to do this for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.