More people borrowing to build own homes
15 March 2004
Mortgage lenders are reporting an increase in interest for self-build projects, as more and more first-time buyers struggle to get onto the housing ladder.
Despite the hard work involved in self-build, first-time buyers are becoming increasingly attracted to the process, which can work out cheaper than buying a readymade property. The average self-build project costs £147,000, according to specialist Self Build ABC, while the average readymade detached house costs £248,000.
Ten per cent of homes constructed in the UK every year are self-build. Self-build houses are worth an average of 25 to 30 per cent more than they cost once completed.
First-time buyers opting for self-build only have to pay stamp duty on the plot of land, but not on property itself or on the building work.
Alison Rollsy, a spokeswoman for Norwich & Peterborough building society, told The Independent: "We are seeing more first-time buyers opt for self-build. They usually use a family connection, such as mum or dad, or nan and grandad, who might have some land they can let them build on. This obviously isn't available to other self-builders, so it gives people who find themselves in this position quite an advantage."
Some lenders allow first-time self-builders to choose from their entire range of home loans, meaning they take advantage of the best rates on offer.
With self-build mortgages, the loan is released in several stages as various sections of the building work are completed. As a result, buyers will need some cash in reserve to pay trades people and cover some expenses and will also need a bigger deposit than on a standard mortgage (around 10 or 15 per cent of the total value of the loan).