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Self-build is ready for high street attention

In 2011 Datamonitor predicted that self-build would be the best performer in terms of growth over the next five years, with gross lending rising to a startling £1.9bn by 2015.

The upward trajectory of this market has not gone unnoticed by lenders. Ironically, it is those in the regions that are showing their mettle and reaping the rewards.

Building societies like Melton Mowbray, Bath, Hanley and Saffron offer a growing list of self-builder products at competitive rates.

So what is holding back larger lenders? Risk mitigation continues to be critical but as a demographic group, self-builders tend to have a cast iron profile – mature couples, generally on their third home and with larger than average equity, usually looking for about 70% LTV.

And the nature of self-building means most homes gain 20% to 30% on final valuation, compared with land and building costs.

In the past, lenders may have been concerned about the building process stalling along the way.

Now, indemnity insurance can cover the fees to complete the building of the house, including project management fees, and give lenders administrative support, as well as covering borrowers’ remaining financial input.

This allows the full value of the property to be realised, reducing the risk of loss to both lender and borrower.

In over a dozen years in the self-build industry I have seen only 50 abandoned projects out of 14,000. It is time for high street lenders to embrace this marketplace officially.


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