Mortgages for Knock Down and Rebuild
Best Mortgage Rates
Mortgages for Knock Down and Rebuild
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- Lloyds Bank
- 4.07% Initial
- 5 year fixed
- 6.6% APRC
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Cashback Max £250Free LegalsFree Valuation
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- 4.10% Initial
- 5 year fixed
- 6% APRC
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Cashback £0Free LegalsFree Valuation
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- 4.14% Initial
- 5 year fixed
- 6.3% APRC
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Cashback £0Free LegalsFree Valuation
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- 4.17% Initial
- 5 year fixed
- 6.4% APRC
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Cashback £0Free LegalsFree Valuation
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- 4.17% Initial
- 2 year fixed
- 6.7% APRC
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Cashback £0Free LegalsFree Valuation
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- Halifax
- 4.18% Initial
- 5 year fixed
- 6.7% APRC
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Cashback Max £250Free LegalsFree Valuation
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- Halifax
- 4.18% Initial
- 5 year fixed
- 6.7% APRC
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Cashback Max £250Free LegalsFree Valuation
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- 4.19% Initial
- 5 year fixed
- 6% APRC
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Cashback Max £1,250Free LegalsFree Valuation
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- 4.19% Initial
- 2 year fixed
- 8% APRC
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Cashback £0Free LegalsFree Valuation
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- 4.20% Initial
- 5 year fixed
- 6% APRC
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Cashback £0Free LegalsFree Valuation
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Mortgages For Knock Down And Rebuild
Knockdown and rebuild mortgages
In recent years, building your own home has become more popular, and there are special mortgages available for this purpose called 'self-build mortgages'. How the money is paid to the borrower differs slightly between these types of mortgages. To facilitate property development, some borrowers use development finance or bridging loans.
Rebuilding a house after it has been knocked down and rebuilt with a mortgage
A borrower's ability to get a mortgage to knock down an existing property and build a new one depends on many factors related to the building and the land. The borrower's personal financial circumstances, such as their credit score and deposit size, will also affect their eligibility.
A self-build mortgage will depend on the end value of the new property and the exit strategy of the borrower if the borrower already owns the property and land outright and has planning permission to build a new home on the plot. For example, if this is the borrower's primary residence or if they intend to sell it on or rent it out, the loan will depend on the end value of the new property.
In cases where the demolition of the existing property will put the mortgage into negative equity, lenders may be less willing to lend. The loan size exceeds the value of the property/land it is secured against. If the lender had to repossess the asset, they might get back less through its sale than they originally lent. In addition, lenders are more averse to lending on non-traditionally built properties that may be difficult to sell.
There is also no guarantee the borrower will be able to secure a mortgage for development if they do not already have planning permission.
Self-build mortgages: how they work
Self-build mortgages pay out in stages rather than granting the borrower the entire sum from the start, as this can minimise the risk to the lender of not receiving their money back if the borrower defaults.
When a certain stage of the construction is complete, the lender will release the next portion of the mortgage to the borrower. The premiums on these mortgages tend to be higher since they are considered to be riskier.
Mortgage adviser
An independent, whole-of-market mortgage adviser can provide impartial advice and search across providers to find suitable mortgages for borrowers looking to knockdown and rebuild property.
To investigate your finance options call our broker team or fill in our call back form - speak to our independent mortgage broker team who will be able to offer impartial advice or you can call us on 0117 403 3464