How do self build mortgages work?
Unlike a standard mortgage, a self build mortgage does not release all the funds upfront. Instead, money is released in stages as your build progresses.
Each stage is typically inspected by a surveyor before the next payment is approved.
- Purchase of the land (if applicable)
- Foundations completed
- Wall plate level
- Roof completed / weather-tight
- First fix
- Final completion
Some mortgages release funds in arrears (after each stage is completed), while others may offer advance stage payments. The structure you choose can have a big impact on cash flow during the build.
Repayments during the build
In most cases, you will start paying interest as soon as the first stage funds are released. This means you may be paying rent or an existing mortgage at the same time as your self build loan.
Understanding when repayments begin — and how much they will be at each stage — is crucial to avoiding financial pressure during the project.
Deposit requirements
Self build mortgages are considered higher risk by lenders.
As a result, deposit requirements are usually higher than for a standard purchase — often in the region of 30% to 40% of the total build cost.
- Land value may count as part of your deposit if you already own it
- Equity in an existing property may sometimes be used
- Cash deposits are assessed very carefully
The structure of your deposit and funding must be agreed before the build begins.
Land ownership and site funding
Many lenders will not lend directly on a building site alone.
If you already own the land outright, this can significantly improve your options. If not, specialist funding may be required to purchase the site before the build mortgage can begin.
This is one of the most common areas where self build projects stall without proper advice.
Professional requirements
Lenders will expect the build to be carried out by qualified, registered professionals.
- Architects and designers must be appropriately accredited
- Builders must carry suitable indemnity insurance
- Detailed costings and timelines are required
Self-managed builds may be possible, but criteria is tighter and documentation requirements are higher.
Why self build mortgages are harder to secure
From a lender’s perspective, a self build mortgage carries additional risk.
- The project could overrun or exceed budget
- Construction could stop part way through
- The partially completed property may be difficult to sell
Because of this, lender choice in Northern Ireland is limited, criteria varies significantly, and applications must be packaged carefully.
Why specialist advice matters
Self build mortgages are not suitable for trial-and-error applications.
Applying to the wrong lender, misunderstanding stage payments, or underestimating costs can result in delays or failed projects.
A mortgage broker experienced in self build lending can:
- Confirm whether a self build mortgage is viable before you commit
- Structure funding in the correct order
- Help manage cash flow throughout the build
- Avoid unnecessary credit searches or failed applications
If you’re considering a self build, getting advice early can save significant time, stress, and cost later in the process.