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Mortgages For Knock Down And Rebuild

Our Mortgage Service - helping you make the right decision

Special features of what we offer include:

  • Whole of market service - we work with leading UK Self Build lenders
  • Finance for different stages of your build
  • Access to exclusive loan deals not available on high street
  • Fast turnaround - speak to us today if you need to move fast
  • Looking to raise additional finance on top of your existing mortgage or buy to let mortgage? - we have access to a range of finance solutions

To investigate your self build mortgage options call our mortgage team on 0117 313 7780 or fill in our call back form.

"The essence of the Fair Mortgages service is professional independent mortgage and protection advice brought to you by a team of specialist advisers and experienced administration support".

As your mortgage is such an important transaction, good advice is imperative.

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Mortgages For Knock Down and Rebuild

Many people dream of building their own home, doing so has become more popular and there are special mortgages available designed for this purpose called ‘self-build mortgages’. These types of mortgages differ somewhat in how the money is paid to the borrower. Some borrowers use development finance or bridging loans to facilitate property development.

Getting a mortgage for knock down and rebuild

Whether a borrower will be able to get a mortgage to knockdown an existing property and build a new one is dependent on many variable factors to do with both the building and the plot of land. The borrower’s personal financial circumstances, such as their credit score and deposit size will also affect what is available to them.

In cases where the borrower already owns the property and land out right and has planning permission to build a new property upon the plot, getting a self-build mortgage will be dependent on the end value of the new property, and the exit strategy e.g. is this to be the borrower’s main residence or do they intend to sell it on or let it out.

Lenders however may be more unwilling to lend in cases where the demolishment of the existing property will, even temporarily, put the mortgage into negative equity. This is where the size of the loan is greater than the value of the property/land it is secured against. This is because it poses a risk to the lender that if they had to repossess the asset they may get back less through its sale than they originally lent. Lenders are also more averse to lending on property that may prove difficult to sell on such as buildings with non-traditional builds.

Borrowers may also find it more difficult to find a mortgage for development, in cases where they do not already have planning permission, as there is no guarantee they will be able to secure it.

How self-build mortgages work

Self build mortgages tend to pay out in stages, rather than granting the entire sum to the borrower from the outset, as this can minimise the risk to the lender of them not getting back what they lent to the borrower if they were to default. Generally these work by once a certain stage of the development is completed following an inspection the lender will release the next portion of the mortgage to the borrower. As these kinds of mortgages are considered to be riskier then tend to attract higher premiums.

Mortgage adviser

Borrower looking to knockdown and rebuild property may benefit from enlisting the services of an independent, whole-of-market mortgage adviser who can offer impartial advice as well as being able to search across providers to try and find suitable mortgages for their clients.

To find out if Fair Mortgages could help you, fill in the online contact form to request a call-back, at time that suits you, from a Fair Mortgages adviser who can offer a free initial consultation. Alternatively call directly on: 0117 313 7780

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