Budgets & Costings
Establishing Your Budget
Organising your funding may not be the most exciting thing to think about when building your own home, but it’s undoubtedly one of the most important. Setting a clear budget for your self build should be one of the first things you do.
Your budget is made up of how much money you have already and how much you can borrow. The total figure should be the very maximum you spend on your new home. How much you can borrow depends on your individual financial circumstances. As with any mortgage, lenders look at your income and outgoings, to calculate how much they are willing to lend.
By choosing certain design elements before discussing your finance, you may be limiting your choice of lenders and suitable mortgage products. So, before you get carried away with choosing your design and materials, you should always consult a specialist mortgage adviser to make sure your plans are affordable and suitable for a mortgage.
Your overall budget
Start by knowing how you're going to fund your build and how much you have available to spend. Liquid savings + borrowed funds = total budget.
How much can you borrow?
This depends on your financial circumstances and how much you can afford. As with any mortgage, lenders will assess your income and outgoings to calculate how much they are willing to lend you.
As a rough rule of thumb when it comes to lender affordability calculations, you will likely be looking at around about 4.5 - 5 x your income.
To get an idea of how much you can borrow, use this calculation:
What fees are involved?
You should allow approximately £5000 to cover mortgage related costs including site insurance and structural warranty, however this will vary depending on your project. Your mortgage adviser will always discuss what the exact fees will be for your own project and issue a KFI (Key Facts Illustration) with details of all of the fees involved. Remember there are many savings to be made with self build such as the VAT reclaim, and you only pay stamp duty on the cost of your land, not the end value of the property.
When you are in a position to move forward an adviser will look at your project in more detail and carry out a full income and affordability check to give you a more accurate figure.
With a standard self build mortgage you can typically borrow up to 75% of your project costs, while with BuildStore, you can borrow up to 95% of 95% of your project costs, 100% if you already own your plot, with a maximum of up to 85% of the expected end value of your new home.
What deposit will I need?
With BuildStore you can get your project underway with as little as 5% deposit but you'll increase your mortgage options and array of lenders with a more comfortable 15-20% deposit.