A new mortgage product has been launched by Hanley Economic Building Society that will allow self builders to build second homes.
In a very positive development for self builders looking to expand their property portfolio, Staffordshire-based Hanley Economic will help self builders who want to build a second residential home, providing the home is not used for rental purposes.
This means that self builders can use the mortgage product to build a holiday or retirement home, or a weekend retreat.
The ‘build for second home’ is a 3.99% two-year variable discount with a 60% LTV (loan to value), a maximum loan amount of £500,000 and product fee of £998.
This means that after two years, self builders who’ve purchased the product will move back onto the standard variable rate (SVR), unless their self build is completed or they have renegotiated the mortgage.
Self Build Mortgages
Self build mortgages differ from traditional mortgages: whereas a traditional mortgage will release funds in one lump sum upon completion, self build mortgage funds are released at key stages throughout the build project.
Hanley Economic’s new product will comprise stage releases in arrears that correspond with identifiable stages of the self build.
Alex Ward-Brassington, Intermediary Marketing Specialist at Hanley Economic Building Society, said of the product: “Over the last 18 months we have attended various events (including Homebuilding & Renovating shows) and have spoken with so many people at various stages of the self-build process. We spoke to many people that wanted to build their own home in an area they loved for a weekend away, or for retirement in particular – it was a real common theme that people didn’t really know where to start with. We thought there was a real gap in the market.
“Self build is a really exciting growing area that is under-serviced and we believe lenders need to be a little more creative in the area. We have listened to our customers and want to take a bit of experimental approach to creating new products suitable for their needs.”
In October, Hanley Economic launched a part-complete self build mortgage product to help projects which are already underway, which can be useful for those who have used their savings in the build but are then presented with unexpected costs and need supplementary financial support.