Self Build Finance
A self build mortgage and finance is very important. Cash flow must be seamless to keep to schedule and a contingency fund is a must. Having established an overall budget for your self build home, there are some more figures to crunch.
A self build has 3 important financial elements:
FUNDING - how much will your project cost, and how will it be financed - cash, self build mortgage etc.?
STAMP DUTY - If your building plot does not exceed more that £60,000 Stamp Duty is not applicable. If the plot for sale is over £60,000 Stamp Duty will be levied at 1% on the amount over this.
VALUE ADDED TAX - VAT does not apply to new private domestic residence. You will be able to reclaim any VAT on construction materials if you have paid it.
A 10% contingency sum is a good guideline to aim for when planning your self build finance. If part of the build goes over budget or additional problems are encountered, you should be able to cover this to ensure the rest of the self build can continue smoothly.
A building plot for sale can consume around 1/3 of your total budget. It is possible to buy building land for sale for less by purchasing a plot of land for sale without planning permission. This carries no guarantee but if you buy wisely with a view to building in the medium to long term it can minimise the risk. Your plot of land may increase in value substantially, once planning permission has been granted.
Connections to water drainage, electricity, gas can quickly escalate in cost - particularly if you are looking to purchase in a more rural location. Depending on the location of your building plot, these can come to £5,000 or more.
Planning and Building Regulations fees also need to be included along with any surveying work required by your lender. Site surveying and soil samples taken by a surveyor and/or structural engineer dependant on soil conditions and incline.
Should you require the services of an architect or project manager roughly 10% of your total budget will be taken up by them.
With all these figures and quotes to obtain and factor into your self build finance it can seem a daunting challenge. It is best to ensure the finances are in place rather than be caught short mid-build and see your hard work, money and dream home go to pieces.
