Building your own home is one of the most rewarding property journeys—but it's also one of the most complex to finance. Unlike standard mortgages, self-build finance is released in stages, requires detailed planning, and comes with a very different set of lender expectations.

Here's what you need to know in 2025.

What Is a Self-Build Mortgage?

A self-build mortgage provides staged funding to cover land purchase and the cost of construction. Rather than receiving the full amount upfront (as with a traditional mortgage), funds are released in phases tied to build milestones.

There are two main types:

• Arrears Stage Payments – Funds released after each stage is complete
• Advance Stage Payments – Funds released before each stage begins (less common, typically requires specialist lenders or insurance-backed structures)

When Do You Need Self-Build Finance?

You’ll typically need this type of finance if:

• You’re buying a plot with or without planning permission
• You’re demolishing an existing structure to rebuild
• You’re significantly altering or extending a property beyond standard renovation
• You want to avoid selling your current home during construction

The Typical Stages of Self-Build Lending

Lenders usually release funds across 5–7 stages of the build:

1. Land Purchase
2. Preliminary Works and Foundations
3. Wall Plate Level / Structural Shell
4. Wind and Watertight (roof, windows, doors)
5. First Fix (plumbing, electrics)
6. Second Fix (plastering, joinery)
7. Completion / Final Certification

Some lenders may combine or break down these stages further. A clear costed schedule is essential.

Key Lending Criteria in 2025

Lenders are cautious with self-builds due to the higher risk and complexity. Expect to meet the following:

• Detailed Cost Breakdown – Materials, labour, contingency
• Planning Permission – Full or outline planning in place
• Professional Valuation – Both land value and projected GDV (Gross Development Value)
• Build Insurance – Often including structural warranty or 10-year guarantee
• Qualified Team – Architect, builder, or project manager in place
• Exit Strategy – Either a remortgage on completion or intention to sell

How Much Can You Borrow?

Lending is based on the lower of either the total project cost or final valuation. Most lenders cap borrowing at:

• 75% of land value
• 85% of total build costs
• 70–75% of final GDV

Some specialist lenders may go higher with robust planning and experienced teams.

Fixed vs. Flexible Structures

There are a few ways to finance your self-build:

• Self-Build Mortgage – Traditional staged release
• Bridging Finance – Faster but more expensive; useful if you’re under time pressure or need funds before planning is granted
• Development Finance – For larger projects, especially if multiple units or commercial resale is involved
• Drawdown Mortgages – Offered by some specialist lenders, allowing you to access funds as needed

Each route has pros and cons depending on your experience, risk appetite, and project scope.

Common Pitfalls to Avoid

• Underestimating Costs – Always include a 10–15% contingency
• Delays in Planning or Build – Can create funding gaps
• Overvaluing Final GDV – Lenders won’t release funds beyond their upper risk limits
• Using Non-Approved Contractors – Some lenders only work with approved tradespeople
• Insufficient Documentation – Incomplete drawings, permissions, or insurance can derail applications

What Makes an Application Stand Out?

In 2025, lenders want assurance that:

• You’ve done this before (or are working with someone who has)
• You’re realistic about timeframes and costs
• You have a backup plan if things overrun
• The final property is mortgageable or sellable

If you’re applying for a self-build mortgage without this preparation, your chances of approval drop sharply.

Should You Use a Broker?

Absolutely. Self-build finance is one of the least standardised products in the market. Lender appetite, stage definitions, documentation requirements, and cost caps vary enormously.

A specialist broker can:

• Identify lenders who suit your build type
• Help structure your funding to match your build schedule
• Manage the paperwork and avoid delays
• Secure better rates based on your experience or exit plan

📞 Want Help Financing a Self-Build in 2025?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.