Q&A with Tom McSherry, BuildStore Mortgage Services

One of the most important aspects of building your new home is understanding how you’ll pay for it. With this in mind, we asked Tom McSherry from BuildStore Mortgage Services some frequently asked questions about how to finance self-build projects and the common pitfalls to beware of.

How does a self-build mortgage differ from ‘normal’ mortgages?

Unlike a standard mortgage, where the full amount is released on the day you complete the purchase, a self-build mortgage releases funds in stages. These stages align with the build progress, such as:

1. Buying the plot

2. Laying the foundations

3. Wall plate level / frame up

4. Wind & watertight

5. First fix

6. Completion

This staged release helps clients manage cashflow throughout their build ensuring they have the money they need, when they need it.

When should I start thinking about financing my self-build project?

If you're dreaming of building your own home, one of the smartest moves you can make is to speak with BuildStore Mortgage Services - and the earlier, the better. Whether you're just exploring the idea or already looking at land, getting expert advice upfront can save time, money, and stress. Establishing an early budget can help your architects, manufacturers and builders by having a clear budget from the outset.

How much can I borrow to pay for my self-build home?

We specialise in self-build finance. Our exclusive products are designed to give you maximum flexibility and borrowing power based on your project’s true potential.With BuildStore’s tailored mortgage solutions, you could borrow:

• Up to 95% of the plot purchase price, even if you haven’t bought land yet, we can help finance it with a low deposit helping you secure the right plot sooner.

• Up to 95% of the build costs whichallows you to fund materials, labour, and professional fees as your build progresses without needing huge upfront capital.

• Up to 100% of the build costs when you already own the plot.

We look at the completed value of the home, not just your current spend. This allows for higher borrowing and greater design potential.Your maximum borrowing will depend on:

• Your income and affordability (just like a traditional mortgage)

• The total cost of your plot and build

• The projected end value of the property

• Your deposit and savings

• Your build method and timescale

The Buildstore team help to pull together a detailed cost breakdown and cashflow forecast, which forms the basis of your mortgage application.

What’s the most important thing to consider when choosing a self-build mortgage?

The most important thing to consider when selecting a self-build mortgage is how well the mortgage matches the cashflow needs of your project.Unlike buying a completed home, a self-build requires ongoing, stage-by-stage funding. When working with an offsite manufactured system like structural timber frame, you'll need money at various critical points for materials, labour, and services before or as the work happens, not after.

• Cashflow-Focused Lending Matters

Some lenders often release funds in arrears (after a stage is completed), which can leave you out of pocket, waiting on money to pay your builder or order materials.BuildStore Mortgage Services exclusive mortgage solutions offer something different:

• Advance Stage Payments

We can arrange for funds to be released before each build stage begins, giving you the financial confidence to move forward without delays and be in a position to pay your timber frame manufacturer as required.

• Tailored to Your Build Route

Whether you’re using a contractor, project managing yourself, or building with SIPs or timber frame, we structure your mortgage to suit your project, building method and timing.

• Detailed Cost Forecasting

We’ll help you create a build cost breakdown and cashflow forecast, so your mortgage aligns with exactly when and how much money you’ll need during the build.In Summary: Look Beyond the Interest RateWhile things like rate, term, and fees are always important, for a self-build project, they’re secondary to this question: Will this mortgage provide the right amount of money, at the right time, to keep my build moving?If the answer is no, the risk of delays, stress, and cost overruns goes up fast. 

Does the construction method make a difference to my mortgage?

It affects how and when you need funds. Different building systems have different cashflow patterns, which means the timing and size of your mortgage stage payments need to match:Timber Frame / SIPs / Modular Systems are off-site manufactured systems and require large upfront payments before materials are delivered. Erection on-site is rapid (within days or weeks) as a result often require advance stage payments to pay the manufacturer before delivery.If your mortgage only pays in arrears (after work is completed), this could cause serious cashflow issues.It’s important not to be put off by the myths as offsite manufactured systems can be supported with tailored solutions in place to meet the payment terms required.Brick and Block / Traditional Build is labour intensive and built on site in stages. Materials and labour are typically paid gradually as a result has a more even distribution of spend across the superstructure phase of the build.BuildStore Mortgage Services creates a detailed build cost breakdown and cashflow forecast on every project that reflects the chosen system.We’ll guide clients to lenders who understand the system and support the chosen route including over 70 exclusive products not available on the high street.

Will the current uncertainty in the world have an impact on financing my project?

Like most times of volatility some people will pause and consider if this is the right time. However, there are some compelling reasons to believe this is a great time to selfbuild your own home including:

• Stamp duty only being applicable on the purchase price of the land

• Exempt from VAT

• Interest rates not too dissimilar to high street rates

• Interest only concession on the mortgage during construction

• Low deposit mortgages opening the door to 1st time buyers as well as those downsizing

• Building a higher quality home designed to the needs of your family

What does BuildStore offer to self-builders?

At BuildStore, we’ve been helping people design and build their dream homes for over 25 years. We’re proud to be the UK’s leading expert in self-build finance, plot finding, and project support.We are also delighted to have been named the UK’s Best Specialist Mortgage Broker at this years’ What Mortgage Awards.With over 2,000 self-build units in the ground at any one time, we know exactly what it takes to turn a vision into a reality. Whether you’re starting with a blank page or halfway through your journey, BuildStore is here to guide you every step of the way.We also offer PlotSearch the UK’s largest online land-finding portal, with thousands of genuine, planning-approved plots.For more information, visit: Mortgages | Self Build Finance | Homebuilding Finance | BuildStore