Self Build Mortgages in Leicester
Self Build Mortgages in Leicester
Arrears or advance — the decision that matters most
Arrears stage payments release funds after each stage is completed and inspected. You pay for the work, then the lender reimburses you.
Advance stage payments release funds at the start of each stage, so the money is there before the work is done.
The difference sounds administrative. In practice it is the difference between a project that runs and one that stalls.
On an arrears basis you need enough working capital to fund an entire stage — foundations, or the whole superstructure — before seeing a penny back. Many self builders discover mid-project that they cannot, and the site sits idle while they raise short-term money at high cost.
Advance products cost a little more. For most people building their first house, that premium is worth paying. We will model both against your actual cash position rather than assuming.
The stages
Typical release points, though they vary by lender:
- Land purchase
- Foundations complete
- Wall plate level — walls up to roof height
- Wind and watertight — roof on, windows and doors in
- First fix and plastering
- Completion
A monitoring surveyor or valuer inspects at each point. Their visit costs money and takes time to arrange, so build both into the programme.
Land, planning and the deposit
Most lenders want full detailed planning permission, not outline. A small number will fund land with outline permission, at much lower loan to value.
Planning across Leicestershire is handled by the relevant authority — Leicester City Council within the city, and the district and borough councils across the county, each with their own local plan and policies. Confirm the position directly with them.
Expect to fund the land largely from your own resources. Lending is generally calculated against land value plus build cost, or against the expected finished value, whichever gives the lower number — and your contribution goes in first.
Self build plots in Leicestershire tend to be individual infill sites, garden land, demolition-and-rebuild, or occasionally a barn or agricultural conversion. Conversions bring their own complications: existing structures can hide problems, and lenders sometimes treat them as renovation rather than new build.
Warranty and building control
A structural warranty from a recognised provider is required by lenders and must be arranged before work begins. Retrospective cover is difficult and expensive.
You will also need building control sign-off, either from the local authority or an approved inspector.
Neither is optional, and both matter beyond the mortgage — if you sell within ten years, your buyer's lender will ask for the warranty.
Budget properly, including contingency
The most common reason a self build gets into difficulty is not the lending. It is a budget with no slack in it.
Build costs move. Ground conditions surprise people. Specifications get upgraded partway through. A contingency of at least 10% to 15% is not pessimism, it is planning — and lenders will ask what yours is.
Also budget for the costs outside the build: professional fees, warranty, building control, monitoring surveyor visits, utility connections, and the interest during the build itself.
VAT — the part that surprises people
Self build carries a genuine advantage that few first-time builders know about at the outset.
New residential self builds can generally reclaim VAT on materials, through HMRC's DIY housebuilders scheme. Labour from VAT-registered contractors on a new build is normally zero-rated in the first place, so it should not be charged at all — if a builder is adding VAT to labour on a new dwelling, question it.
Two practical points decide whether you actually receive the money:
Keep every invoice. The claim requires original invoices, properly itemised and addressed to you. Reconstructing this afterwards is difficult, and claims are rejected for poor paperwork.
There is a time limit for submitting after completion, and it is strict.
Conversions are treated differently from new builds, often at a reduced rate rather than zero. Confirm the current rules on gov.uk and take advice from your accountant — we do not provide VAT advice, but it is worth knowing the scheme exists before you start paying invoices.
Plan the exit at the start
Most self build products are more expensive than a standard mortgage, appropriately so given the risk. They are not meant to be permanent.
Once the property is complete, habitable and warrantied, it should be refinanced onto a standard residential mortgage. Agree that plan at the outset and we will diarise it, rather than leaving you paying build-phase pricing on a finished house.
Speak to a Leicester self build adviser
Bring your plot details, planning position and build budget. We will tell you what is fundable and, just as importantly, whether the cash flow works.
Call 0116 277 7536 or book a free consultation.
Cedar House, 3 Broad Street, Enderby, Leicester, LE19 4AA.
Common questions
What is the difference between arrears and advance stage payments?
Arrears releases funds after each stage is completed and verified, so you fund the work first and are reimbursed. Advance releases funds at the start of each stage, so you have the money before the work is done. Advance costs slightly more but removes the cash flow problem that stops most self builds.
How much deposit do I need for a self build in Leicester?
Typically 20% to 25% of total project cost, though some lenders go to 15%. Lending is usually calculated against land value plus build cost, or against the expected finished value, whichever produces the lower figure. Expect to fund the land largely yourself.
Do I need planning permission before applying?
For most lenders, yes — full detailed planning permission rather than outline. A few will fund a land purchase with outline permission at lower loan to value. Planning across Leicestershire sits with the relevant district or city council, so confirm the position with them.
Do I need a warranty?
Yes. Lenders require a structural warranty on a new build, from a recognised provider, and it must be arranged before work starts rather than retrospectively. It is also needed if you sell within ten years, as your buyer's lender will ask for it.
Can I do the work myself?
Partly. Lenders generally accept self-managed projects where a competent professional team is in place, but most want the main structural work done by qualified contractors. Purely DIY builds are far harder to fund and to warranty.
What happens when the build is finished?
Most self build mortgages are designed to convert to, or be refinanced onto, a standard residential mortgage once the property is complete and habitable. Plan that exit at the outset — the rate you pay during the build is not the rate you should be on afterwards.
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