Some lucky people may have the cash required to build their own home, but the vast majority of the 20,000+ people who build their own home each year in the UK need to borrow the money they need to complete the build. This is being made increasingly easy due to many high street banks and building societies offering Self-Build Mortgages.

The main difference between a Self-Build Mortgage and the traditional House Purchase Mortgage is that self build mortgages release the money in stages as the build progresses. There are generally two different types of self-build mortgage offered, arrears based and advanced payment. Both of these mortgage options usually offer payments over 5 stages, with the payments made after completion of a stage in the case of the arrears based deal, and in advance of the stage in the advanced deal. Advanced payment self-build mortgages are less easy to find due to the obvious risk involved for the lender.

There are several things you will need to check when thinking about a self-build mortgage. Firstly, will your lender allow you to stay in your current home at the same time as having the self-build mortgage? Some will and some won't, and this could mean the difference between living in a house and staying in a caravan on site for the duration of the build.

You will also need to plan a realistic budget and schedule for the building work. The lender will always need to see this before they will agree to lend you any money. Some lenders will also be unwilling to lend you the money if you are doing the work yourself rather than employing tradesmen. The rules vary on this (some will allow you to do selected jobs on the site, some will insist all work is carried out by qualified builders, etc) so be sure to find out.

Another essential is insurance. You will be borrowing a large sum of money, which will still be payable whatever happens to the house. It is possible to insure against some of the many potential pitfalls of self-building.

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