Why is having a house of your own so popular?
To start with, you can build, renovate or extend it as per your taste: there is no rent to pay, the pride of owning a high-value property is a joy like no other, and it can ensure a steady inflow of cash if you decide to rent a part of it.
So how can I build a house of my own?
There are home builders to help you this. The greatest question you should answer is if you have what building a house cost?
I am born with a silver spoon and money is not a problem for me
It’s great to hear that.
I don’t have enough money on me. What should I do?
Then the only way forward is to get some bank or lender to finance your new home construction. This is where a self build mortgage will come in handy.
What is the difference between an ordinary mortgage and a self build mortgage?
The main difference between a self build mortgage and a house purchase mortgage is that with a self build mortgage money is released in stages as the build progresses rather than as a single amount.
Why I should go for self build mortgage rather than ordinary one?
Because a self build home can get you 25-30% more money than what you have spent on building it. Even if you decide to keep it, you get more value out of it than any other similarly priced property – after all you have built it to your own taste and needs.
So how many types of self build mortgages are there?
Money is released in stages during self build mortgage and there are typically 5-6 stages – starting with foundation to final finish – a home is built in. Depending on when you get the money, before the beginning of each stage or after completion, there are two types of self build mortgages: “Advance and Arrear.
Please elaborate on Advance Mortgage and when should I get it
An advance mortgage will get you the money before you begin working on each stage. Once a stage is over, the bank will send a valuer to inspect the completed work and then – if satisfied – he will trigger the release of funds for the next stage.
In case you depend on bank’s money for everything – from purchasing the land to funding every stage of the house building – this type of mortgage is best for you.
Explain more about the Arrear mortgage and when it should suit me
This type of mortgage is best suited to builders who can fund a stage or two with their own money. Don’t get this mortgage if you totally depend on lender’s money to even start the work.
In this type, once you have completed a stage of construction, the bank will send a valuer to inspect the build. Once satisfied, he will release the money into your account. If purchase of the land is also a part of mortgage plan, you can expect to get anywhere between 75%-85% percent of the price of the land.
Provided that you own the land, or have some surplus property you can further get loan against, this type of mortgage will serve you the best.
Also read related articles How to Manage Money and Save When Undergoing Home Construction