How do self build mortgages work?

A self build mortgage is a mortgage for a home that the borrower is building, either personally or through builders and an architect. Instead of paying the full loan on completion of a purchase, the lender releases money in stages as the build progresses, and interest is charged only on the amount drawn so far.

Once the home is finished, the self build mortgage either converts to a standard residential mortgage with the same lender or is replaced by a remortgage. Self build mortgages are regulated where the borrower will live in the home.

Self build mortgages explained simply: the plot is the first security, and each stage adds value that supports the next release. The lender's valuer or a professional certifier confirms each stage before the money is paid.

Self build mortgage stage payments are usually tied to the plot purchase, the foundations, the walls reaching wall plate, the home becoming wind and watertight, first fix and plastering, and completion. The exact stages, and how much is released at each, are set by the lender and agreed before the build starts.

Each release needs a valuation or a certificate from the architect, surveyor or warranty inspector overseeing the build. Delays in sign-off can hold up the next payment, so builders and suppliers need to know the release timetable.

A stage payment mortgage on a progressive basis releases money as stages finish. How the stages fit the cost of a specific project can be estimated with the self build mortgage calculator.

An arrears self build mortgage pays each stage after it is complete, so the borrower funds the work first and is repaid by the lender. An advance self build mortgage pays before each stage, which reduces the cash needed up front but is offered by fewer lenders, usually at a higher cost.

Arrears products suit borrowers with savings or an existing home to sell. Advance products suit those with little spare cash, or kit homes where suppliers need large payments before delivery.

Some lenders offer a mix, with an advance for the plot and arrears for the build. Comparing the cash flow of each option against the build programme shows how much working capital the project needs.

The deposit for a self build mortgage is usually larger than for a standard purchase, because the lender is funding a home that does not exist yet. Lenders set limits on the share of the land price and of each build stage they will fund, and the deposit or owned land covers the rest.

How much can be borrowed on a self build mortgage depends on income and outgoings, as with any mortgage, and on the lowest of the build cost, the expected finished value and the lender's limits. Lenders also want a contingency in the budget for overruns.

Land already owned outright often counts towards the deposit. How lenders treat the plot is set out on the self build mortgages including land page.

Self build mortgage criteria cover the borrower, the plot and the project. Lenders check income, credit history and deposit, then the plot's planning permission, title and services, and finally the build costs, programme, contractor or project manager, and the architect's certificate or structural warranty that will cover the finished home.

The finished home must be mortgageable, so lenders look at the construction method and the warranty. Kit, timber frame and modern methods of construction are widely accepted with a recognised warranty.

Self builders can reclaim VAT on many materials through the HMRC DIY housebuilders scheme, which can lower the overall cost (GOV.UK, accessed 20 Oct 2026).

Getting a self build mortgage usually starts with costed plans, planning permission and a decision in principle on the whole project. The full application then goes in with the plans, a cost breakdown, the build programme and income documents, and the lender values the plot and the expected finished home before making an offer.

A broker who arranges self build cases can match the project to lenders' criteria on drawdown, construction method and plot type. Self build cases are a smaller market than standard purchases, so lender choice can be narrow.

Firms that arrange these cases can be compared on the self build mortgage brokers page.