How self build mortgages work
Instead of releasing the full loan amount upfront like a standard mortgage, a self build mortgage releases funds in stages as your project progresses, commonly for things like buying the land, completing the foundations, reaching wind and watertight, and finishing the interior. During the build, you typically pay interest only on the amount actually drawn down so far, not the full facility, so the cost steps up as each stage releases more money.
Funds can be released in arrears, after a stage is completed and inspected, or in advance, before work on a stage begins. Arrears payments are more common and usually cheaper, since the lender can see the value the money has already created; advance payments give you cash upfront for materials and labour but tend to come with higher rates. Once the build finishes, typically within around 24 months of the first funds releasing, the mortgage usually converts to a standard capital repayment mortgage over a remaining term.
Why this calculator uses your own stage plan
There's no official, government-published, or industry-standard stage schedule for self build mortgages, the way there is for something like Income Tax bands. The number of stages, how much is released at each one, and the timing between them vary hugely by lender and by project size and build method. Rather than presenting a fabricated "typical" schedule as if it were authoritative, this calculator starts with an editable example and lets you enter your own realistic plan, so the numbers reflect your actual project rather than an assumption.
Example calculations
These worked examples come straight from the calculator above, so the figures match exactly what you'd see entering the same numbers yourself.
5-stage build, 12 months
£170,000 drawn over 12 months
- Build interest
- £6,150
- Payment after completion
- £965/mo
3-stage build, 10 months
£200,000 drawn over 10 months
- Build interest
- £3,833
- Payment after completion
- £1,289/mo
3-stage build, 9 months
£200,000 drawn over 9 months
- Build interest
- £5,525
- Payment after completion
- £1,107/mo
Frequently asked questions
How does a self build mortgage work?
Unlike a standard mortgage, the money isn't released as one lump sum. Instead, funds are released in stages as your build progresses, commonly for things like buying the land, completing the foundations, reaching wind and watertight, and finishing the interior. During the build, you typically pay interest only on the amount actually drawn down so far, not the full facility. Once the build is finished, the mortgage usually converts to a standard capital repayment mortgage over a remaining term, similar to any other residential mortgage.
What's the difference between arrears and advance stage payments?
With arrears stage payments, funds are released after each stage is completed and inspected, meaning you need to fund the work yourself first and get reimbursed; this is the more common, and often cheaper, option. With advance stage payments, funds are released before a stage begins, so you have cash upfront for materials and labour, but fewer lenders offer this and rates tend to be higher, since the lender has less security for money that hasn't yet been turned into a completed stage of building work.
Why does this calculator ask me to enter my own stage plan?
Because there's no standard, lender-wide stage schedule. The number of stages, their timing, and how much is released at each one vary hugely between lenders and between projects, depending on the build method, size, and location. Rather than presenting a fabricated "typical" schedule as if it were official, this calculator lets you enter your own plan, or a realistic estimate of one, so the numbers reflect your actual project.
How much deposit do I need for a self build mortgage?
It varies significantly by lender and by whether you choose arrears or advance stage payments; some products ask for as little as 5% towards the land and build costs, while others expect 15% to 25% or more, sometimes calculated against the land purchase specifically rather than the whole project. Check the specific requirement with your lender rather than assuming a fixed percentage.
What happens if my build takes longer than planned?
Many self-build mortgage lenders expect the build to complete within a set window, commonly around 24 months from when the first funds are released, and may charge extra fees, a higher rate, or require a formal extension if it overruns. Delays are common in self-build projects, so it's worth building some contingency into your own timeline and checking your specific lender's policy on extensions before you start.
Can I use self build finance for a renovation or conversion, not a new build?
Many lenders that offer self-build mortgages also offer similar staged-drawdown products for major renovations, conversions and extensions, sometimes marketed separately as renovation or conversion mortgages. The stage-payment and interest-only-during-work mechanics this calculator models are broadly the same, though eligibility and lender criteria differ from a full new-build self-build project.
Do I need specialist self build insurance?
Yes, typically. A standard buildings insurance policy usually doesn't cover a property under construction, so most self-build mortgage lenders require a specific self-build insurance policy, covering things like site risks, unoccupied property risk, and the works themselves, for the duration of the build. This is a separate cost from the mortgage figures shown in this calculator.
Methodology and assumptions
This calculator assumes:
- Interest during the build is charged only on the cumulative amount drawn down so far, stepping up after each stage, and is paid monthly rather than added to the loan.
- The final stage in your plan marks build completion; there is no further interest period after it.
- On completion, the full amount drawn becomes the principal of a standard fixed-rate repayment mortgage, using the same amortization formula used across UK lending.
- Your stage plan (timing and amounts) is entirely user-supplied, since there is no standard, lender-wide schedule.
- All figures are rounded to the nearest penny.
Sources
This calculator is based on general guidance about how self build mortgages work, not a published government rate table:
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