What do we do?


The prospect of borrowers building their own home is becoming increasingly popular, but this is often overshadowed by the overwhelming prospect of getting a mortgage to finance a Self-Build project. 

We are passionate about empowering borrowers to build their dream home, so we have crafted a range of self-build product offerings. We will lend a maximum LTV of 75% of the completed valuation or 80% of the land value, offering a flexible approach to the different stages of the project. In addition to this, we will also consider modern methods of construction.

Our key criteria
Self Build and Custom Build

The Society will consider lending to customers requiring self-build mortgage facilities, subject to the following criteria:

  • No roll up of interest is allowed. Borrowers must make monthly payments on instalments as they are advanced
  • Max 75% LTV of completed valuation
  • 80% LTV of land valuation
  • If the borrower is a not a tradesperson themselves or is a tradesperson and does not have a project supervisor, we will require a professional project manager e.g. tradesmen including plumbers, builders, electricians, etc. We will accept cases where the borrower is a tradesperson and does have a project supervisor without a professional project manager
  • Interest only is permitted during the duration of the build only and must be switched to capital and interest on final release of funds. However, affordability will be assessed on a capital and interest basis
  • Detailed costings for the project are required and a contingency of 20% of total project cost is added on to take account of inflation and unforeseen circumstances. We will consider a minimum of 15% where a fixed priced contract is being used, subject to enhanced mandating between 15% and 19.99%
  • If living in their own home whilst building the property, 12 months committed expenditure e.g. rent or mortgage payments are taken into account with expenditure when reviewing affordability. The client may pay for example up to 12 months’ rent in advance, to enable the rental expenditure to be excluded from the Income and Expenditure assessment. Proof of this arrangement must be evidenced on application
  • A firm timetable for construction of the property is required. Building work must start within 6 months of first draw down of funds and property must be completed 24 months from first draw down of funds
  • Outline planning consent for the type of property the applicant intends to build with at least two years’ consent remaining is required. Where detailed planning is obtained we will require detailed architects’ plans and specifications for the property
  • If the property is built before the ERC period has expired, the customer will be offered either a loyalty or the retention product range. The ERC’s will be waived in the following instances:

    • If another product is taken out with the Society. The completion certificate will need to be supplied at this stage

    • The customer has transferred to a retention product with the Society and they have plans to sell their existing property once moved to the completed self-build. We will waive the overpayment charge and ERC on the sale value of the existing property only

The following stage releases apply, however a flexible approach can be exercised for each case:

Percentage of Advance to be released

Stage

Phase

Max % of current value for funds release

1

Land purchase

80%

2

Initial project costs and laying foundations

80%

3

Construction to wall plate level

80%

4

Building made wind and watertight

80%

5

First fix and plastering

75%

6

Second fix through to certified completion including landscaping

75%

 

Note with regard to stage 1, where the applicant already owns the land, 50% of the value of the land, up to a maximum of 80% of the total loan amount, may be released up front (see examples below).

Example 1:  Total loan amount required is £100,000 and land value is £50,000.  Therefore the full 50% of the land value can be released up front (£25,000) as this only represents 25% of the total loan amount.

Example 2: Total loan amount required is £25,000 and land value is £50,000.  Therefore, as 80% of the total loan amount only equates to £20,000, this would be the maximum that could be released up front (even though 50% of the land value would be £25,000).

  • Up to stage 4, the maximum loan amount released will be 80% of the current value at each stage. At stages 5 and 6, we will release the remaining funds up to a maximum of 75% of the current value at each stage. The amount of funds released at each stage will be subject to valuer’s comments
  • The Society reserves the right to carry out interim valuations during any stage of the build. A re-inspection will be required at each stage prior to funds being released to the customer.
  • The fee for this service will be payable by the customer and can be found in the List of Charges document
  • Knock-down rebuild remortgage – Customers must be able to reduce the mortgage based on the low value point i.e. LTV at land value plus planning permission (first stage)
  • Expat applications will be considered and normal expat criteria will apply. In addition to this we will require:

    • Confirmation of who will be managing the build and

    • When the expat customer plans on returning during the build

  • Gifted deposits will be accepted. Funds from family members to assist with initial cash flow costs, that are agreed to be re-paid, will also be accepted however this will need to be included in the schedule of costs. It would also need to be incorporated into the last release of funds
  • Ten years structural warranty is required. List of main providers are held on the UK Finance Handbook. Other providers may be considered subject to checks of the UK Finance handbook
  • Site insurance and a copy of the insurance schedule will be required with a minimum of the following included:
    • £5 million public liability

    • £10 million employers’ liability

    • Contract works (for the re-instatement value)

    • Dudley Building Society to be noted as mortgagee

  • Site insurance will be accepted from a set list of providers. Other providers may be considered subject to checks of the UK Finance handbook

  • Before building commences the valuer must have sight of the detailed planning and building regulations approvals. A Builders Notice will not be acceptable

  • The building work must be supervised by a suitably qualified Architect. All Architects supervising the build must have Professional Indemnity cover of no less than £1m and one of the qualifications below:

    • ARB UK Architects Registration Board UK (previously known as ARC)

    • *RIBA / ARIBA / FRIBA Chartered Member/Associate/Fellow of the Royal Institute of British Architects

    • MCIAT Corporate Member of the Chartered Institute of Architectural Technicians

    • MASI/FASI Corporate Member/Fellow Member of the Architects and Surveyors Institute (excludes AMSI)

    • C. Build E MCABE/ C. Build E FCABE Chartered Member/Chartered Fellow of the Chartered Association of Building Engineers (excludes A B Eng)

    • MICE/ FICE Member/Fellow of the Chartered Institute of Civil Engineers (Excludes AMICE)

    • FCIOB/MCIOB Fellow or Member of the Chartered Institute of Building

    • MRICS / FRICS Member or Fellow of the Royal Institution of Chartered Surveyors (RICS)

    • MI Struct Eng/ FI Struct Eng Chartered Member or Fellow of Institute of Structural Engineers

*only acceptable if also registered with the Architect’s Registration Board (ARB).

Advanced Stage Releases:

Typically, stage releases will be released in arrears of work being complete. Stage releases in advance of work being complete can be considered subject to the following criteria being met:

  • The Society has a product available for advanced stage releases

  • The Society is able to take a charge on a second property, The Society is able to take a charge on a second property, the property must have sufficient equity to cover 50% of the requested loan amount (including the contingency fund)

  • A valuer shall be instructed prior to each stage being released to ensure progress is being made and the end value is still on target

  • Final maximum LTV of 75%

  • The following stage releases apply

Maximum Percentage of Advance to be released

Stage

Phase

 

1

Land purchase

80% of Land Value

2

Initial project costs and laying foundations

20% of build costs capped at £150,000

3

Construction to wall plate level

20% of build costs

capped at £150,000

4

Building made wind and watertight

20% of build costs capped at £150,000

 

All advances stage payment applications will be subject to enhanced mandating.

Please note that Advance Stage Release applications are subject to product availability and restrictions may apply.

Eco-Self Build

The Society will allow Eco Self-Build properties. An Eco Self-Build can be defined as a property which is anticipated to have an EPC rating of A or B and at least one eco feature. Eco features could include:

  • Higher than normal levels of thermal insulation

  • Better than normal airtightness

  • Good levels of daylight

  • Passive solar orientation — glazing oriented south for light and heat

  • Thermal mass to absorb that solar heat

  • Minimum north-facing glazing — to reduce heat loss

  • Mechanical ventilation with heat recovery (MVHR) system

  • Heating from renewable resources (such as solar, heat pump or biomass)

  • Photovoltaic panels, small wind turbine or electricity from a ‘green’ supplier

  • Natural materials — avoidance of PVCu and other plastics

  • Rainwater harvesting

  • Greywater collection

  • Composting toilet

  • Glass that has two or three layers with a vacuum in between to prevent heat loss; (double or triple-glazed windows)

  • Solar panels or wind turbines

  • Geothermal heating and growing plants on the roof to regulate temperature, quieten the house, and to produce oxygen

Eco-Self Builds will be subject to valuer comments.

Contact Us

Contact our Intermediary Team with any case queries you may have.

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