Self-build Finance Made Easy - How Much Can I Borrow?

There are many ways in which to fund your self-build project, but how do you know which one is best for you? David Snell looks at the different ways to finance a self-build, including mortages and how much you can borrow.

For decades, lenders have worked on the basis of ‘income multipliers’, i.e. the eventual loan being so many times the borrower’s income or incomes. Typically that has been 3.5 times a single income. For joint applications it has been 3.5 times the main income plus the secondary income, or 2.75 times the joint income, whichever is the greater. But with house price inflation and easy credit it has been possible for mortgages to be given up to five times the joint income.

The failure of the sub-prime mortgage market in the United States, the Northern Rock fiasco and the resultant credit crunch has all but put paid to excessive lending and, in any event, responsible lenders were already moving to the concept of affordability.

This means that two couples with the same income might not necessarily be able to borrow the same amount of money, and a number of issues such as family circumstances, other commitments, disposable income and credit score will be taken into account. The process of determining just how much you can borrow has, therefore, become fairly intrusive, which is why when seeking mortgage advice you have to talk to a properly qualified mortgage advisor.

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