Saffron has launched an interest-only mortgage for the self-build market to help reduce costs for borrowers.
Available for 24 months, the product has a 1.19 per cent interest rate, a 1 per cent arrangement fee and no early repayment charges (ERCs).
It can be used to cover 65 per cent of the purchase price of the plot, 100 per cent of the build costs and a maximum of 75 per cent of the gross development value.
After the two-year period is up, the borrower can switch to another Saffron mortgage product or remortgage to another lender.
Draw-down funds can be accessed as required, and they are no longer restricted by inflexible stage payments.
Saffron will also accept applications from first-time buyers.
Anita Arch, head of mortgage sales at Saffron, said: “We’ve listened carefully to feedback for self-builders, who tell us they want to keep mortgage costs to a minimum during the build period and that they also want the flexibility to draw down funds as and when required, rather than being tied to an inflexible stage payment system.
“This deal, which offers a combination of a discount, interest-only payments and drawdowns as required, ticks all the boxes.”
Carl Shave, director at Just Mortgage Brokers in East Anglia, described the offering as “a perfectly placed product".
“It gives the ability to keep costs down, and not just from a rate point of view - the interest only option allows people to keep their monthly commitments down,” he said.
“The fact that there are no ERCs gives complete flexibility for customers to move to another, better-suited product.”