How the help to build scheme could fund your self-build | moneyfacts.co.uk

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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 04/06/2021

At a glance

  • The Help to Build loan scheme offers £150m in loans to boost deposits for self-build mortgages
  • The average maximum LTV for self-build mortgages in England and Wales is 70%
  • The details of the Scheme will be announced in Summer 2021

 

What is the Help to Build Scheme?

The Help to Build Scheme is a new scheme announced by the Government in April 2021. The scheme provides £150m in the form of loans to those wanting to get a self-build mortgage. On average, self-build mortgages (excluding remortgages) in England and Wales have a maximum loan-to-value (LTV) of 70% . The Help to Build Loans are expected to help reduce the buyer’s deposit down to 5%. However, the loan is not expected to be available upfront and could instead only be released to the lender when the self-build project is completed. The loan would need to be repaid back to the Government after a set amount of time. It is not yet known how long borrowers would have to pay back the loan or any interest that would be applied. The full details of the scheme are expected in the Summer 2021.

How does the Help to Build Scheme help those starting a self-build project?

The expectation is that the scheme will help to free up cash towards build costs and help borrowers to get a better mortgage interest rate due to having a larger deposit.

How long with the Help to Build Scheme last?

The scheme is expected to last for four years.

Why use a specialist self-build mortgage?

There are mortgages available as dedicated self-build mortgages, while other lenders will accept a self-build project using their standard mortgage product. The advantage of a specialist self-build mortgage is that you can drawdown money from the agreed mortgage amount in stages, for example to buy the land, complete the foundations. This is instead of borrowing the whole amount up front and then starting to incur interest on the whole balance from day 1.

Which lenders accept Help to Build loans as part of their mortgage range?

It is not yet known which lenders will participate in the scheme.

 

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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

builder next to built house

At a glance

  • The Help to Build loan scheme offers £150m in loans to boost deposits for self-build mortgages
  • The average maximum LTV for self-build mortgages in England and Wales is 70%
  • The details of the Scheme will be announced in Summer 2021

 

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