Building your house is an exciting achievement, but careful planning of finances ensures that you do not have any regrets. There are two main avenues to build your own house in Northern Ireland – supervise the entire process on your own, or hiring a contractor to manage everything for you.
In Northern Ireland, it is a dream shared by many to own a house, but the housing market to date has been less than accommodating. With new government initiatives coming into effect, self-build and owner build homes are set to become a massive industry.
To accomplish the dream of building a house, the financial lenders have diverse types of mortgages to suit the owner build movement. These mortgages have helped many people realize the dream of owning their homes. The conventional mortgage is not ideal when self-building or owner-building your dream home. A specialist self-build mortgage is your best option, and only a few lenders offer it.
This is a special type of mortgage structured for people building their homes or are undertaking large-scale renovations. More and more people are choosing to build their own homes as it is a much more satisfying and cost effective method than buying one already finished. The value of the property with house and land usually far exceeds the value of the land alone.
The Self- builder also reduces the costs by having their VAT ZEROED.
A self-build mortgage differs from the conventional residential mortgage since the lender provisions funds in different phases rather than getting a lump sum amount in one disbursement. This is a risk mitigation factor taken by the lender, to disburse the risk. The lender usually decides the installments.
In Northern Ireland, the self-build mortgage rates are higher than that of the conventional residential mortgages.
Why Self Build Mortgage
The biggest advantage of the self-build mortgage in Northern Ireland is that you get to save big on money you would have paid on VAT. The law does not require that you pay anything for the building you are putting up. This can be more financially rewarding in the long run.
Cons of Self Build Mortgage
Unlike the conventional residential mortgage, the self-build mortgage involves more paperwork which can be time consuming. It also requires a larger deposit which usually sits between 25 – 50% at the very start. As you put up your home or undertake major renovations, alternative accommodation reservations will be a negative cash flow in your books so if you can arrange cheap accommodations during the build process this will help you keep this under control.
Failure to keep up with the self-build mortgage repayments could see the lender repossessing your completed property. It is essential to have a stable source of income to avoid repossession that could leave you in the cold.