Best self-build mortgage deals

What is a self-build mortgage?

A self-build mortgage is for people who want to build their own home or carry out a major renovation or conversion.

The big difference is that the money is released bit by bit, as each stage of the build is completed. For example, you might get money to:

• Buy the land
• Lay the foundations
• Put up the walls
• Add the roof
• Finish the inside

Some lenders release the money after each stage (this is called arrears). Others may offer advance payments which can be helpful if you need to pay builders or buy materials upfront.

Self-build mortgages can be interest-only while the work is being done, switching to a repayment deal once the home is finished.

Why choose a self-build mortgage?

Self-build mortgages are useful if you:

• Want to build a home that’s tailored to your needs
• Already own land or have found a plot
• Need to release funds gradually rather than in one go

The key benefits are:

• You only pay interest on the amount you've drawn
• You have more control over the home you're creating
• The total cost may be lower than buying a finished home

However, some downsides are:

• You’ll need a bigger deposit upfront
• Money is released in stages, not all at once
• There aren’t as many lenders to choose from

How self-build mortgages work

To get a self-build mortgage, you’ll need to provide:

• Proof of planning permission
• A breakdown of build costs
• A full timeline for the work
• Details of your builder or contractor
• Site insurance and a structural warranty

Lenders want to see that your plan is realistic and affordable. They’ll usually carry out a valuation at each stage before releasing more money.

You’ll often need to start with a bigger deposit, typically 25% or more of the land and build costs.

Who can get a self-build mortgage?

You’ll need to pass the usual affordability checks, plus a few extras:

• A good credit history
• Proof of stable income (or clear funding if you're self-financing)
• Detailed plans for the build
• Planning permission in place

If you’re managing the project yourself, lenders may look more closely at your experience. If you’re working with a builder or architect, they may want to see their qualifications and insurance.

How to find the best self-build mortgage deals

Self-build mortgages aren’t available from every lender, and the deals can vary quite a bit. Some offer fixed rates, others variable. Some are interest-only during the build, while others ask for repayments from the start.

We’re pleased to have teamed up with Buildstore to offer our customers expert advice on self-build mortgages. Their team will:

• Help you find the best mortgage for your project
• Guide you through the build cost assessment
• Provide guidance on budgeting and cash flow
• Support you with lender applications
• Ensure funding is aligned with your build schedule
• Offer ongoing advice to keep your project running smoothly
• Support you through the stage payment process

Please note Buildstore are not part of L&C and will charge a fee of £95 on application and £300 when your mortgage offer is issued. L&C will receive a % of any commission received by Buildstore should you choose to proceed with them. All applications are subject to lending and eligibility criteria.

Making repayments on a self-build mortgage

During the build, most self-build mortgages are interest-only. This keeps payments lower while work is ongoing.

Once the build is complete, the loan usually switches to a repayment mortgage, and you’ll start paying back the capital.

If your plans change or costs increase, speak to your adviser straight away, self build delays can affect when money is released.