Financing Your Self-Build Project

Once you've secured your chosen plot of land, your next crucial step involves arranging the funding for your building endeavour.

Funding Your Dream Home: Mortgages and Alternatives

Many individuals choose a self-build mortgage. This type of loan operates differently from a standard house mortgage; your lender typically releases money to you in pre-arranged phases as your construction progresses. They will also periodically check on your project's advancement.

Beyond mortgages, you have other avenues for financing. You might consider using your own personal savings, or perhaps selling your current property. If you decide to sell your existing home, ensure you account for any extra accommodation expenses you'll incur during the time your new house is being built.

The Home Building Fund

The UK government has set aside a substantial £3 billion for the Home Building Fund. This initiative aims to boost the creation of new homes across England. Through this fund, loans become available to various builders – from small-scale and community groups to custom builders and even larger development companies – helping them finance their construction ventures.

Businesses in the private sector are eligible to apply for this financial assistance. It supports the construction of different types of new homes, such as affordable rental properties, homes available through shared ownership schemes, or those offered on a rent-to-buy basis.

Applying for the Home Building Fund

To start your application, you'll first need to discuss your proposed project with Homes England. (This organisation was previously known as the Homes and Communities Agency, or HCA.) This conversation happens before you submit your formal loan application.

The Home Building Fund provides two distinct types of loans, specifically designed to meet different needs:

• Development Finance: This loan covers the expenses directly linked to the actual building and construction process.

• Infrastructure Finance: You can use this funding for preparing your site and land before development begins.

Key Features of the Home Building Fund:

Here are the main characteristics of the Home Building Fund:

• You can access both short-term and long-term borrowing options.

• Loan sums start from £250,000 and can go up to £250 million.

• Typically, development finance loans come with a five-year repayment period.

• For infrastructure finance loans, the repayment term can extend up to 20 years.

• The interest rates for your loan are established in advance.

• Beyond financial assistance, you can also receive non-financial guidance and support.

When your loan application is assessed, the criteria will include aspects like how well your project demonstrates value for money, the level of local support it has, and the timeline you've proposed. For additional details, you can visit the Home Building Fund section on GOV.UK.