Mortgages & Finance
Stage Payment Types
Stage payment mortgages are specifically designed to suit the needs of homebuilders. They differ from traditional mortgages as they release funds in stages - in arrears or in advance.
Depending on your individual circumstances, your stage payments will either be guaranteed based on your costs (Cost Based Mortgages), or rely on a rising value throughout the build (Valuation Based Mortgages).
Having your funds released in stages throughout the project is ideal, as this is how you'll pay for your new home, whether that's your pre-agreed fixed price payments to your main contractor, or paying for materials or labour, as needed.
It also makes real financial sense, as you don't need to take all of your mortgage funds at once, you'll keep your monthly payments low, only paying interest on the money you've drawn down, to date.
The table below illustrates the typical stages for a brick and block build, a timber frame build and a renovation or conversion project.
|Stage||Brick & Block||Timber Frame||Barn Conversion|
|1||Purchase of land||Purchase of land||Purchase of property|
|2||Foundations||Foundations & the cost of the frame||Structural overhaul|
|3||Wall plate level||Frame erected||Structural walls, floors & roof|
|4||Wind & Watertight||Wind & watertight||First fix & plastering|
|5||First fix & plastering||First fix & plastering||Second fix to completion|
|6||Second fix to completion||Second fix to completion|
Keep your options open
It's important to discuss your options and your individual project with a specialist adviser, so that you are matched with the right stage payment mortgage to ensure success.
If you approach lenders directly, they will only offer a very limited product range which may not fit your requirements. Keep in mind also, the very real risk of your project being down-valued during the build that comes with most arrears stage payment mortgages offered by lenders.
At BuildStore Mortgage Services, we have access to our own range of exclusives as well as the other products available on the market and we'll check them all to ensure you get the perfect match. And, with BuildStore you can enjoy specialist support throughout your project too!
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