BuildLoan launches short-term product for customers who build themselves

BuildLoan has introduced a short-term mortgage for customers who need to finance the construction of bespoke homes until they move in and sell their old property.

The self-build finance and bespoke build specialist says the product – developed with the Buckinghamshire Building Society – is designed to help customers who want to pay off their self-build mortgage in full using proceeds from the selling their old house.

It says three-year loans of up to £500,000 and up to 85% of construction costs are available, with a current rate payable of 6%, product charge of 2.5% and no prepayment.

The firm says the loan gives self-build customers two years to build their new property and one year to sell their old home and pay off the mortgage, compared to a maximum term of 12 months for a regulated bridging loan.

Funds are released in stages as construction work progresses, with all release stages agreed upon upon application and based on the cost of each stage of work, he adds.

The company says installment payments are useful for self-build customers with less money or for those using a building system such as timber frame, which may require a large upfront payment.

He adds that the product does not require interim ratings, which reduces the risk of a rating drop.

BuildLoan’s Head of Product Development and Underwriting, Chris Martin, says, “Most personalized and bespoke mortgage offerings are not available to customers who have a short-term financing need.

Many self-builders want to stay in their current home for the time to complete their self-build project and will then repay their mortgage in full. This product removes the pressure of having to repay a bridge loan within a year, which for many people is unrealistic or too risky.

Claire Askham, Head of Mortgage Sales at the Buckinghamshire Building Society, adds: “We have designed this product specifically for customers who know they won’t need a long-term mortgage, but need time to ensure their home or custom home is built exactly how they want it.

At the same time, they can sell their old home, without having to accept a low offer to make a quick sale.

To help them afford to borrow what they need to build their home, the mortgage will be arranged on an interest-only basis for the three-year term, because we know it will be paid off at that time. the.

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