Suffolk Building Society seeing "continued growth for self-build mortgages"

SUFFOLK Building Society has said it is seeing "continued growth for self-build mortgages", with brokers saying one reason for the growing demand for self-builds is the lack of homes being built. But one warned: "Building your own home is not as easy as Kevin McCloud might have you think".

Alex Austin, Head of Customer Proposition at Suffolk Building Society, said: "We’re seeing continued growth for self-build mortgages, with borrowers seeking larger loans than in previous years. Since December 2024, one in seven of our applications has been for over £1m. Five years ago, this figure was one in 17.

"Our team has reported that many of their current enquiries from our mortgage brokers are about self-builds. It’s imperative that self-builders obtain robust costings for the project and factor in a contingency amount.

“10%-15% is typical, and this should allow for any unexpected costs or material price rises. An expert lender and/or broker is essential. Borrowers will need to know from the start whether their stage payments will be in arrears — so after the build has started — or in advance. Getting this wrong means the project, quite literally, won’t get off the ground.”

Oliver Cotterell, Managing Director at Bath-based Windsor Hill Mortgages, said the lack of new homes is resulting in more people considering self-build: "We’re definitely seeing more clients exploring self-builds, especially as housing supply remains tight. However, many still lack understanding or confidence in how self-build mortgages work, which can steer them toward other options too early.

"The biggest pitfalls we see are poor budgeting and not planning where to live or how to maintain income during the build. Many try to “go full Grand Designs” and self-manage to save money, but that often has the opposite effect. Getting professional advice early, understanding stage payments, and having a realistic contingency (typically 10%–20%) are key to keeping a project, and your finances, on track."

Omer Mehmet, Managing Director at Welling-based Trinity Finance, said demand for self-build is strong but that too few borrowers understand the mechanics of the loans: "Self-build remains one of the most rewarding but most misunderstood parts of the housing market. We’re still seeing strong demand, but many projects are being delayed as borrowers underestimate how different self-build finance is from a standard mortgage.

"Too many people arrange funding without realising the money is released in stages, not up front, which causes cashflow chaos mid-project. Around 25-30 lenders currently offer self-build mortgages, but criteria are strict, typically requiring a 25%-30% deposit, full planning permission and a clear exit plan.

“The key is preparation: understand the stage-payment process, build in contingencies and work with a broker who’s done it before. Done right, self-build is life-changing; done wrong, it can stop halfway.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, agreed with Cotterell that tight housing supply is a factor in the growth of self-build: "Self-build interest is increasing as general housebuilding flags, though financing self-build remains a niche market.

"Lenders offering these mortgages are limited, mostly smaller lenders and local banks, and the rules are more stringent than for a standard loan. Funds are usually released in stages, not upfront, a detail many borrowers overlook.

"The interest rates charged are often expensive as an extra premium is charged by the lender due to the risk. The biggest mistakes are usually underestimating costs, forgetting contingencies and being caught out by stage-payment criteria. 

"Too often projects stall because cashflow dries up between releases. Self-builders often get carried away and build properties that are much larger then they expect.

“I would advise planning meticulously, working with a specialist broker, budget at least 15%–20% extra, and make sure your lender accepts your build method. With the right prep, self-build can be a rewarding way to create the dream home you want.”

Adam Stiles, Managing Director at London-based Helix Financial Partners, said surrounding yourself with the right team of professionals is critical: "Self-build comes with a large amount of risks and variables that can be mitigated by taking the appropriate advice and surrounding yourself with the correct professional team.

"A lot of lenders will need you to forward fund the build to a certain level before you're able to drawdown. You should also budget for a 10% contingency on the build cost.

Meanwhile, Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, said self-build is not as easy as some TV programmes may make out: "Building your own home is not as easy as Kevin McCloud might have you think. Too many people don't employ quantity surveyors and then try to live in it whilst it is being built.

“It's still a very niche field, though, as few lenders are in the market and the best terms come from specalist lenders. My top tip to anyone considering self-build is to double your contingency budget.”

Pete Mugleston, Managing Director at Derby-based onlinemortgageadvisor.co.uk, agreed that planning and budgeting are key: “Aspiring self-builders need detailed planning, realistic budgets and a solid contingency fund to avoid costly delays and keep their project on track.”