Searching for the right property can be a long and stressful process. Even when a particular home seems promising, you’ll probably find that your location, design, and price ideals rarely align.
The alternative is to build your own home instead of buying a pre-built property. This allows you to tailor every aspect to your personal needs and preferences – with guidance from the experts.
You could try to do most of it yourself (if you have the experience and qualifications to carry out building work). Or, you could hire an architect and builders to take care of things for you.
The last option, for those who want a hands-off experience, is hiring a contractor to sort everything out on your behalf. However, this approach is obviously going to be more expensive.
Whichever self-build route you take, it’s likely that you’ll need a mortgage to finance the project. After all, most of us don’t have the funds to build an entire house just sitting around.
Standard mortgages are for newly-built properties, so you’ll need a specialist mortgage. Let’s take a look into stage payment mortgages and how they can help you to self-build your dream home.
Banks tend to release standard mortgage funds once a property sale completes.. Mortgages for self-builds are different. They release payments in instalments instead of a lump sum, across multiple stages of the building process.
This type of mortgage allows you to borrow money to buy land to build on first, then pay for the construction in stages as it progresses. It’s helpful for managing cashflow if you don’t have the funds to pay for the project upfront yourself.
Since it’s a specialist loan, there are fewer providers to choose from than for standard mortgages. The stage payments reduce the lender’s risk, as there’s more room for error with self-builds if they aren’t managed properly.
There are typically two self-build or stage payment mortgages available: advance and arrears.
Advance mortgages allow you to draw the funds ahead of each stage to fund each part of the project. They usually cover up to 75% of the value, so the deposit will be around 25%.
Arrears mortgages only release payments after the completion of each stage. This means you have to fund each stage yourself first, then the mortgage instalments will essentially repay you. You’ll also have to pay a larger deposit of up to 50%, as this type covers less of the value.
Self-build mortgage loan amounts depend on whether they’re cost-based or valuation-based. This means the stage payments are based on either a portion of the project costs or the value of the project at each stage – usually, whichever is lower.
Each potential lender will assess your financial circumstances (income, outgoings, and debts) and your project planning to establish how much they want to lend you. The more prepared you are, with accurate cost projections, the more likely they are to approve your self-build loan.
Interest rates for these mortgages are higher than standard rates due to the higher risk involved for the lender. They tend to be around 4-6% per annum. However, some lenders will reduce the interest rate later in the build when the property is habitable.
Depending on the lender and particular mortgage, you may be ‘tied in’ to this loan for 1-3 years. Self-build homes typically take at least a year to complete. Once you have a Building Control Completion Certificate, you may be able to switch to lower interest.
There are many advantages to self-build mortgages. They enable you to make regular payments to your contractor or purchase materials as needed. Since you only take an instalment, this keeps your monthly interest payments lower than if you had to pay interest on the total amount from day 1.
Of course, the main draw of these mortgages is that they enable you to design your ideal home. Rather than buying a new build in a cookie-cutter development, you can customise everything exactly how you want it. The final product often has a higher property value than it costs to build.
The higher deposits and interest rates are the main downside, as you still have to cover your living costs elsewhere throughout the build. It also requires much more paperwork in preparation. You need planning permission and project cost evaluations ready before you can even apply.
On the plus side, there’s the potential of saving thousands of pounds in Stamp Duty. While this tax has increased when buying completed builds, you can get around this with a self-build. You’ll only have to pay Stamp Duty on the land that you bought to build your home on, not the building itself.
Understandably, you want to know when you’ll receive the mortgage payments. The lender will normally only release the stage payments after receiving a satisfactory report at each stage. Your supervising architect or the lender’s property valuer will complete regular inspections.
Many lenders won’t offer a mortgage on a land purchase only, and will only release the first payment once the foundations have been laid and inspected. The regular inspections will allow the lender to monitor your progress, and ensure you’re staying on track with the project plan.
Most banks will permit Architect’s Certificates as proof of the status of a building project in order to release the funds. Prior to the final payment, you must provide a copy of a Professional Consultant’s Certificate (PCC) to confirm the property’s completion.
The key stages for self-build mortgage instalments may vary according to the lender, but they tend to follow this pattern:
These can vary according to the type of build, as ‘brick and block’ construction is different to timber frame construction. Renovations, such as barn conversions, are also completely different to self-builds from the ground up on empty land.
Self-build mortgage criteria will vary from lender to lender, so you’ll need to double-check their specific requirements before applying. Some require working to a fixed budget, and you may have to include contingency costs of up to 20% in your build cost estimates.
The criteria usually depend on the build type and location, but you will obviously need to comply with current Building Regulations at all times. You’ll need to identify or estimate the costs for:
When applying for the mortgage, you’ll need to provide copies of the relevant documentation. This includes fixed-price contracts for architect’s and builder’s work, if applicable. The bank can take up to 3 months to process this while they investigate your paperwork and finances.
You must be able to prove that the construction project is registered with the HB47 Scheme, or that it will be supervised from start to finish by a qualified architect or building surveyor. In the latter case, they must have certification for adequate professional indemnity insurance.
You’ll also need an appropriate building insurance policy and structural warranty. Please be aware that these are not the same thing, and banks usually require prospective borrowers to have both in place. These legal protections should give you peace of mind, as well as the lender.
When you take out a self-build loan, the lender will expect an initial evaluation at the beginning, interim evaluations throughout the project, and a final evaluation on completion. To prove to the bank that everything is proceeding as planned, you’ll need Stage Payment Certificates.
Also known as interim certificates, or ‘pay as you build’ certificates, you won’t be able to receive the funds and pay contractors without them. Luckily, the ABC+ Warranty team at Architects Certificate can provide these all-important documents for your self-build project.
Simply get in touch and we can ensure that due diligence is done for your self-build construction. You can call us on 0161 928 8804 or send enquiries via email to email@example.com. We’ll be happy to advise you on Stage Payment Certificates for your project.
An architect’s certificate is issued by a chartered architect or surveyor on a newly built or converted property and is of 6 year duration. Though it has been renamed and is officially called ‘the CML Professional Consultants Certificate’, the term ‘Architect’s Certificate’ is still widely used.
Architect’s certificates are an important document for a number of reasons, but particularly if you or your purchaser want to take out a mortgage on a newly built property.
Mortgage lenders will generally only lend money against a newly built property if it is protected by a warranty scheme such as NHBC warranty or a Professional Consultants Certificate.
Smaller builders and self builders favour a professional consultants certificate/ architect’s certificate because they are often as much as 50% cheaper than NHBC and are widely accepted by banks and building societies.
An architect’s certificate is only a warranty in the sense that the issuing professional undertakes (by means of a signed CML certificate) that the subject property is built in accordance with the approved plans, complies with building regulations and is to a good standard. This undertaking is primarily for the use of banks and building societies as security for a loan. The lender is provided with an assurance of the standard of construction, which is backed by the issuing architect’s professional indemnity insurance. THIS IS NOT A LATENT DEFECTS POLICY.
Architect’s Certificates are issued as standard for six years cover, which the council of mortgage lenders have approved for use in their standard format. You can also buy additional cover from us, a UK-wide professional consultant’s certificate provider to give ten years cover. This additional cover is called CertificatePlus+ and is available from https://www.architectscertificate.co.uk/ or by calling 0845 680 0467.
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NHBC is saying that new home registrations in the UK for 2013 were up 28% compared to the previous year, with what it called “signs of a broad based recovery in many different regions and the highest new house-building volumes in London for a generation”.
As part of its campaign, the NHBC say ” It will be recruiting 80 new building inspectors with new management roles also being created. More surveyors, engineers and special project managers will also be recruited to ensure that the appropriate technical support is available for builders and their design teams, both on site and during the design stage”.
Here at Professional Consultants Certificate Ltd, the UK’s leading provider of new home certification, we are expanding to meet the upsurge in house building. We currently have 22 regional surveyors with the best professional qualifications; we have recruited from Chartered surveyors, engineers and architects all of which comply to the Council of Mortgage Lenders criteria. Whether its a warranty or a certificate we can help, we can even step in at a very late stage in the construction, which is something the NHBC refuse to do.
Welcome to our new surveyors: Carl Nelson RICS, James Adair RICS, Nii Armar Armar RIBA and Richard Lever RICS.
We hope that this is the beginning of a fruitful and constructive relationship between Professional Consultants Certificate Ltd and these four, highly skilled, CML, now known as UK Finance compliant professionals.
We look forward to seeing Carl, James, Nii and Richard at our next CPD meeting here in Cheshire.
When looking to keep your building insured, you’re going to want to find the best possible warranty, so you know you’re in safe hands. Of course, there are many options out there, so deciding on the right one can be difficult. By looking a little deeper for worthwhile alternatives, you can benefit from a better deal that provides the same level of security.
Obtaining a mortgage on your new build is crucial, and is often a standard requirement from any mortgage provider, so they can feel confident in supplying you with the cover you need. They will always ask for some form of building warranty before granting a mortgage for your property.
One of the most popular options out there is the NHBC Warranty, which is well-known by many. However, many builders that are smaller in size, or those that are self-builders, find that the cost of an NHBC Warranty can be extremely high.
It’s with this in mind that, here at Architects Certificate, we can list some alternatives to this warranty, in some cases saving you over 50% of the cost!
The two primary options to consider for an NHBC Warranty alternative are:
Option 1 – You can obtain a Professional Consultants Certificate, that provides you with a 6-year warranty.
Option 2 – You could benefit from a 10-year structural warranty, like our ABC+ Warranty.
If you’d like to find out more about each of the solutions available, be sure to check out the graphic below for more information. This will help you compare the different options, so you can decide which one suits your requirements best.
We have seen media articles warning of the danger of using an Architects’ Certificate over a full building warranty. It should be said that these are two very different and separate systems, performing different tasks – so it’s like comparing apples to oranges.
However, the main issue is accountability, since remedial repairs are possible for both systems. Worthy of note is that there are far more complaints about the NHBC’s track record than any individual architect.
When choosing your architect to carry out monitoring and site checks, please choose a well-established company. BE WARNED: YOU ARE ASKING FOR TROUBLE IF YOU CHOOSE AN ARCHITECT WITH NO OFFICE OR LAND LINE PHONE , since it is very likely he won’t be around in a few years’ time.
Always obtain their credentials. Are they insured properly? Are they registered for VAT? Does their certificate comply with the Council of Mortgage Lenders or UK Finance requirements? We offer a free checking system for examining compliant certificates, so you can restore your confidence in your cover.
Since 1989, our MD at Professional Consultants Certificate Ltd has advised thousands of house-buyers and builders on the pros and cons of both systems. If you are in any doubt, please ask to speak to one of our highly qualified staff. Our surveyors are covered by a £2,000,000 professional indemnity policy.
Our unique ABC+ Warranty system means that you can start on a low-cost Professional Consultants’ Certificate, and upgrade to a fully compliant Structural Warranty at any time during or after the project.
From the second week in September the Architects Certificate customer service team will be available much later in the day. Our new telephone reception will extend to 16:30. This will enable a much improved service to answer all of your professional consultants certificate enquiries. As the market leader for the industry we can offer very competitive quotes. Go with the best forget the rest. Established 1989.
Professional Consultants Certificate Ltd welcomes Roger Patton as our Northern Ireland regional surveyor. Roger is a very experienced surveyor who has specialised in residential construction for many years. Roger also offers architectural services in addition to site monitoring.
Enquiries are now welcome from Belfast, Omagh, Londonderry, Newcastle, Ballymena, Enniskillen.
Welcome to the March edition of the Architects Certificate monthly newsletter. This Month we revisit the Eco-Build in Penymynydd and a new site in Rhyl, we are also making constant changes to our advertising methods and website.
Welcome to the February edition of the Architects Certificate monthly newsletter.
This month’s newsletter is a bumper edition featuring 5 sites that were visited in early February. There have also been a few updates to the website such as the addition of a testimonials section.
Welcome to the December edition of the Architects Certificate monthly newsletter. Architects Certificate bucked the trend this month, instead of the usual Christmas drop in business activity we have been inundated with enquiries and calls.