Building a Home Financing

How to finance the custom home you intend to build.



Are you looking to build your own home?

This is everything you’ll need to understand about financing your new home.

 

If you’re planning to build a custom home or to have one built for you, you probably know that the process can be complicated.

 

However, getting a mortgage for a new build doesn’t need to be complicated. There are several financing solutions out there specifically for custom homes.

 

So, how should you finance your new custom built home?

There are three main categories of construction financing; Buying a property that has recently been built, building a new property yourself, or getting a contractor to build one for you.

 

At Thrive Mortgage Co, our mortgage specialists will work with you to find the right financing solutions for your new home. We’ll help you to understand the various options and choose the best one for your specific requirements.

 

Click here to begin, or take a look at our construction mortgage guide below.

Construction Financing Mortgage Guide / FAQ

  • How is a Construction/Builders Mortgage different?

    With a builder’s mortgage, you have access to a fund from which you can draw funds during specific stages of the build process. The size of the mortgage depends on how much you need to build your home. The funds are then available to you at predefined stages, also known as ‘draws’, of the construction process. The first draw might be when you purchase the land required for your new property. The second is often around 40% completion (known as ‘lock-up’) and the third usually comes at 65% completion. A fourth draw often comes at 100% completion, though this schedule will vary between lenders and is generally tailored to the unique circumstances of each situation.

     

    If the land you are planning to build on is already owned, this can be used as equity for your first advance.


  • What builder’s mortgage options are available?

    Employing a contractor to build your home

    In this case, the customer enters into an agreement with a contractor to construct a new property. The contractor then needs a Financing Draw. Available options in this situation are a Progress Draw or Completion Mortgage. 

     

    Building a home yourself

    Here, the customer is also the contractor. It may be that sub-contractors are hired for specific aspects, such as plumbing or electrics. Though the same options are available for financing, there may be some restrictions by lenders based on not working with a registered contractor.

     

    Contractor funded build

    This is when a registered builder funds the construction of a new property before selling the completed home to someone. A Completion Mortgage would be used here.


  • What are the benefits of each option?

    Completion Mortgage

    If you are purchasing a property that a contractor has funded and completed, you will only need a mortgage once the home is complete. This is essentially a standard residential mortgage.

     

    Progress Draw Mortgage

    In this case, funds are made available at agreed stages of the construction process. Usually, there are three stages at 40%, 65%, and 100% completion. If land also needs to be bought, then a Land Draw might also be required.

    A solicitor is required to be involved with a Progress Draw mortgage.

     

    Will I need any specific documents for a builder’s mortgage?

    For the most part, the documentation will be similar to a standard mortgage: proof of your income, expenses, identity, and any equity. You may also need copies of any quotes if you are building the home yourself, or evidence of a contract with a builder you are planning to work with. A copy of the title will be needed if you own the home already and any information regarding the land registry. You will also need an insurance certificate, full appraisal, and a House and Plans Specification.


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