Self Build Mortgage
Self-build mortgages differ from ordinary mortgages provided for existing residential properties. With existing properties there is a value on which to lend, and this value dictates how much can or will be lent. The lender knows the value of the security and what the risk might be.
In the case of self-build mortgages, the value of the house increases as the project goes along. The lender is concerned with value and so gives the loan in stages as the value increases. This is a frustrating procedure as surveyors must visit the site, certify a value for the works carried out and then give this written valuation to the lenders, before further self build mortgage funds can be advanced. The self build mortgage payment in stages takes time and causes difficulties of cash flow and has caused many a self build project to be scrapped.
Continue Reading: Arranging the Mortgage
September 2004
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