The main difference between a self build mortgage and a house purchase mortgage is that with a self build mortgage money is released in stages as the build progresses rather than as a single amount.
Some lenders will lend you money to purchase land, typically 75% of the purchase price or value, whichever is lowest.

Your home may be repossessed if you do not keep up repayments on your mortgage.

After this, the money for the build is released in a series of stages. These can be fixed or flexible depending on the lender but usually there are five.

During the build you can borrow typically 75% of the cost of the house as the project progresses, depending on the chosen lender.

There are two methods by which the money can be released during the build – at the end of each stage or at the start of each stage. (Known as arrears stage payments and advance stage payments respectively.)
In the arrears stage payment method, the money for that stage is released after the stage has been completed and a valuer has visited the site and confirmed completion of the stage. This can cause some self builders to have cash flow difficulties.

The advance stage payment method works in such a way that the money expected to be required for that stage is released at the start of the stage before work starts.

This advance stage payment mortgage has become very popular as it gives positive cash flow during the build and the high percentage lending of the cost of the build. This therefore makes it is easier to stay in your current house while the build progresses.

The stages of a build depend on whether or not you are building a traditional (brick and block house), a timber frame construction or if you are renovating or converting an existing property.

The following table gives an indication of the typical stages for each:

Stage	Brick & Block	Timber Frame	Renovation/Conversion
1	Purchase of land	Purchase of land	Purchase of the property
2	Preliminary costs & foundations	Preliminary costs & foundations	Preliminary costs and structural overhaul
3	Wall plate level	Timber frame kit erected	Wind & watertight
4	Wind & watertight	Wind & watertight	Plastering & services
5	First fix & plastering	First fix & plastering	Second fix
6	Second fix to completion	Second fix to completion	To completion

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