Mortgage Advisor & Director
Mortgage Advisor & Director
If you’re looking for a mortgage for a self-build home in Scotland, then read on to find out all you need to know about availability, how to qualify, and whether or not you need to look at Scotland-specific brokers and lenders.
Are self-build mortgages available in Scotland?
self-build mortgages are used to fund the resource and development costs of building your own home. This type of mortgage is available across the UK, including Scotland, and is actually popular for those looking to move to the highlands or outlying Scottish islands. There’s even a helpful guide on self-building a home on the Scottish government website.
Self-build mortgages are like any other mortgage in the sense that you borrow money to buy a home. The distinction being, because the property you’re purchasing doesn't yet exist, funds are released in stages (known as tranches) at relevant times during the development.
While not all lenders serve the remote areas of Scotland, self-build mortgages can be used to build homes anywhere north of the border, if you find the right lender. That’s where we come in, at Teito, as we can help you find the most suitable lender for your specific Scottish self-build needs.
Funds are usually provided either:
- In arrears - meaning funds become available when each trench is complete. This means you would independently need enough capital to complete at least the first stage of your development.
- In advance - meaning you can draw down funds for each tranche before it begins. These are considered to be higher risk, so usually have a higher interest rate.
Lending criteria
The criteria for self-build mortgages is similar to other mortgage types, but there is more focus on the feasibility of the building project and resale potential of the completed property.
- The maximum LTV is usually 80-85%, so deposit requirements are typically at least 15%.
- Lenders will also look at your overall affordability and creditworthiness, as is the case with any mortgage application.
Self-build specific requirements
In addition to the general eligibility requirements you will find for any mortgage, there is also specific self-build criteria to meet as well:
- Property location and suitability of the land and area for a residential home
- The type of construction and property type and whether this is in line with local property
- The experience and credentials of the architects and surveyors
- Whether or not planning permission has been obtained and/or sought
- Whether the property will meet Scottish building regulations
Calculate the cost of your self-build mortgage
Our self-build calculator can be used to calculate self-build mortgages in Scotland, as well as the wider UK.
This is a fairly hard to come by asset, given the complex nature of self-build mortgage calculations, but if you follow the simple steps below, you’ll be well on your way to finding out what you need to know.
- Set the number of tranches (individually financed stages - see below) your project includes
- Input the loan requirement for each tranche
- Pick the interest rate for each tranche - get in touch if you are unsure what rates are representative of the current market conditions
Total Amount Borrowed: £0.00
Monthly Repayments: £0.00
This calculator will give you an idea of the amount you will be borrowing overall and the likely cost of your monthly repayments. Keep in mind that this is a rough approximation and one of our team will be able to give you a more accurate picture.
Note: Self-build mortgages often have fairly modest lending caps compared to other mortgages, but it is generally cheaper to build a home than to buy a pre-built one. For example, the maximum loan size offered by Scottish Building Society is £600k.
Typical tranches
Most self-build projects contain the following, tranches, all of which are selectable on the calculator:
- Land purchase - keep in mind that not all lenders allow for land purchase with a self-build mortgage
- Substructure
- Wallplate/eaves height
- Roof tiling once watertight
- First fix
- Second fix
- Final payment on completion
Do you need to use a local broker?
Many people looking to build a home in Scotland think that they need a specific self-build mortgage broker based there, however, this is not necessarily the case. There are lenders across the UK that provide self-build mortgages for use in Scotland, so it’s perfectly possible to get the advice and knowledge that you need from a UK-wide broker, like ourselves.
If a Scottish broker is your preference, this is something we can aim to cater for as members of our team are based up there and specialise in self-build mortgages.
Although it’s possible to secure a self-build mortgage independently, there are some lenders providing broker-only deals for this type of mortgage. It’s therefore a good idea to seek the help of an expert in Scottish self-build mortgages.
Connect with a self-build mortgage expert today
What lenders are available in Scotland?
There are a number of lenders both in Scotland and the wider UK that provide self-build mortgages for Scottish developments. These include:
- The Bank of Scotland
- Scottish Building Society
- Mansfield Building Society
- Newcastle Building Society
There may also be additional specialist lenders who approve certain self-build mortgages in Scotland, depending on the criteria and geographical location.
Why choose Teito for your self-build mortgage?
Looking for self-build mortgage providers in Scotland can be time consuming and the calculations involved with this type of mortgage are fairly complex. Our experts can provide you with bespoke calculations before you get started, to ensure the feasibility of your project and help maximise your chance of securing the loan that you need.
We also have plenty of experience in sourcing lenders to suit Scottish self-build applicants, so we can help you find you the best rate and deal available. Get in touch to get started with:
- A free initial consultation with no obligation to proceed
- Teito 5-star rated service from experienced brokers
- Exclusive deals that you won’t find elsewhere
- Brokers with an impeccable track record in the Scottish self-build market
Ready to take advantage of a free, no-obligation chat with a mortgage broker who specialises in self-build finance in Scotland? Get started here
FAQs
It can be more difficult to secure any type of mortgage for a Scottish island-based property, however, Scottish Building society do offer self-build mortgages for this purpose. There is also a bank of Scotland self-build mortgage available, so it’s worth speaking to a broker about their geographical criteria.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.