Scottish gives funding injection for self-build

John Lloyd said the Scottish, one of the oldest independent mutual building societies in the world, had experienced a “fairly dramatic” increase in volumes of self-build lending in the past few years, and the mutual was committed to increase this in line with government targets.

He said much of this growth was due to the society’s expertise in dealing with the labour-intensive nature of processing a self-build mortgage, which does not appeal to larger volume-driven lenders.

Mr Lloyd said: “Their systems are not geared up for the complexity of the self-build mortgage and while some smaller lenders offer this service in England, they do not operate in Scotland.”

The mutual’s Blueprint Self-Build Mortgage is offered at up to 80 per cent loan-to-value. It is provided in stage payments and the first installment is based on the value of the plot of land once planning permission has been granted.

The Scottish will allow interest-only facilities during the period of the build and the loan will switch to capital and interest repayment on completion.

The mortgage is currently priced at the society’s standard variable rate for 18 months with a 1 per cent discount for the following 18 months.

The society said that self-build mortgages were generally low LTV, typically below 60 per cent, which makes them advantageous for all parties – clients, builders and the provider

Mr Lloyd said self-build borrowers tend to be more mature third or fourth-time mortgage borrowers, which fits the profile of mutual’s members.

He added: “Self-build helps local and rural communities and also create jobs in these difficult economic conditions. More importantly for the customer the outcome is a home at an affordable price.”

Beverley Callander, mortgage consultant for Perth and Kinross-based Professional Mortgage Advisers, said many people in Scotland still want to build their own homes, but are finding it difficult to get the funding.

During the past four years she said the market had reduced “dramatically” because so many providers pulled out.

Ms Callander said: “There are few lenders doing self-build mortgagees up here because so many customers went bust halfway through building in 2007 and 2008 and could not re-sell their half-finished properties.

“As a result an awful lot of lenders pulled out so this is a fabulous proposition from the Scottish. The only other self-build offering I am aware of is from the Halifax.

“The Scottish is exceptionally good. It is old-fashioned and friendly and you speak directly to the underwriter.”