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Newcastle launches custom build mortgage

Newcastle launches custom build mortgage

Newcastle Intermediaries has launched a set of products for the custom build market available through the Build Store and its intermediary arm, Build Loan.

Custom build is a hybrid of self build and new build, where borrowers buy a plot of land on a development and then decide how they want to design and build their new home either themselves, through an architect or a developer.

Newcastle offers a two-year fixed product at a rate of 5.39 per cent and allows borrowers to overpay by up to 10 per cent each year.

The early repayment charge is 2 per cent until March 31, 2020, when it falls to 1 per cent for the final year.

It is also offering a two-year based rate tracker, currently at 5.19 per cent, with the same maximum LTV, overpayment and ERC terms as the fixed product.

The products are available at a loan-to-value of up to 85 per cent, with fees of £1,195 and a maximum loan of £600,000.

Stuart Miller, customer director of Newcastle Intermediaries, said: "We’ve supported self-builders since 2012, we’re now pleased to expand our proposition into the custom build sector, helping more people create their dream home.

"Custom build offers borrowers the flexibility of a self-build whilst providing the support of a new build. We only offer this lending through build loan due to the specialist care and additional support they can provide brokers."

Repayments are made in stages in arrears, based on agreed milestones during the build as opposed to valuation.

Clients have the option to repay on an interest only option during the build, before reverting to a repayment loan after the build has completed.

Jazz Jhumat, a Manchester-based financial adviser at JJFS, said the product was a great addition to the market.

He said: "It gives more options to individuals who want to do a self-build and the Newcastle are very good. I have dealt with them a couple of times when I have needed to have a higher income multiple for other products and found them to be very professional.

"While I don’t currently have clients seeking to go down the self build route, I would consider these products if I did."

Rachel Pyne, client services director at Buildloan, said she expects such products to become more popular.

She explained: "2019 marks the first year when local authorities are under a duty to deliver planning permissions in line with local demand registers.

"Many authorities see custom build as the only way to comply with the legislation going forward. Around 18,000 extra permissions are expected this year, so the Newcastle’s entry is timely."