Self-Build Mortgages in Northern Ireland

Whether you’re wanting to build a first home in Belfast or convert a seaside bolthole in Bangor, a self-build mortgage could be ideal for funding your new property project. Offering a loan in instalments rather than a lump sum, it can ensure you don’t over or under borrow.

However, obtaining this type of home loan in Northern Ireland is slightly different to elsewhere in the UK.

This guide explains why and shows you how to get the best deal and where to look for any help or guidance you may need.

Can you get a self-build mortgage in Northern Ireland?

Yes, you can. Self-build mortgages are available across the whole of the U.K, including Northern Ireland. Differing to a conventional mortgage, this type of loan can be received in multiple stages over a maximum term of 18 months, rather than as one lump sum.

The idea is that as you go through the building or renovation process you get a better idea of the amounts you need for the purchase of land and materials. At the end of the loan term you can transition across to a conventional mortgage or pay the loan amount back if your intention was to sell the house once complete.

To kickstart this process and decipher how much you could borrow, it’s advisable to seek advice from an expert based locally who knows the Northern Irish market, particularly for this type of mortgage.

Lender requirements

As with any mortgage, you’ll have to meet the criteria put in place by lenders who want assurances you can pay back the loan. They’ll consider your earnings and spending pattern to assess affordability, as well as any debt you have.

Additionally, they will ask for:

• A site map – Lenders don’t just want to know where you’re planning to build but need information on the specific spot you’re looking to build on. If you’ve already purchased the land, the lender will need to see evidence of this.
• Planning permission – Obtained and applied for through one of the 11 local councils in Northern Ireland, this shows you’ve been granted authorisation to build your property on said land.
• House plans – How big will the property be? What’s the layout? What’s a realistic timeframe for the project? Any construction drawings and specifications you can share will give the lender a clearer idea of how feasible your building project is going to be.
• Cost projections – Either a fixed contract quotation or a detailed list of all the costs you’re likely to incur – the purchase of land and planning permission, site preparation and construction as well as any legal fees, design costs – is required. As a guide, the approximate cost of building a home in Northern Ireland sits between £60 to £100 per square foot. Both documents should be developed by a professional architect or developer. Some lenders such as Ulster Bank have a template you can use to lay out the cost of construction.

Note: It’s advisable to add in a contingency amount into the budget too in case costs start to escalate. .

• Insurance – The property, regardless of what stage it’s at, should be insured and include cover for occurrences such as flooding, fire, smoke and storms.
• Information on where you plan to live during the build – If you currently live in a property with a mortgage and plan to live there until your new property is finished, a lender will want to know you’ll be able to afford the original repayments as well as for the new self build mortgage. Living with family until the process is complete is one way of improving how much of a risk lenders perceive you to be.
• An initial valuation report – A qualified valuer will need to determine both the current and projected final value of the property and this should be presented to assist in the lenders’ affordability assessments.
• Who the workers are – You may be project managing yourself and if so lenders will want to know your experience as well as which contractors you’re working with.

The deposit needed

Self-build mortgages are viewed by lenders as higher risk. To counter this you’ll normally be asked to contribute a higher deposit than for a conventional mortgage. So, you should expect to be asked for anywhere between 20% and 40% of the projected final value of the property.

How a local broker can help

Opting to build your own home and pursue a self build mortgage in a small country like Northern Ireland – with limited lenders – does mean more groundwork but it doesn’t have to equate to more stress.

Assessing your circumstances and the home you want to build along with affordability, a broker will be able to advise on what you’ll need to submit for a successful self build mortgage application.

The brokers we work with are based locally and have helped many homeowners in Northern Ireland build their dream homes by understanding the requirements of local lenders. They can draw on those previous experiences to determine which lender is the best fit for you.

They will also be able to:

1. Consult on the application process including your budget, timeframe and loan amount.
2. Compare the whole of the Northern Irish lenders market and access exclusive self build deals.
3. Advise on repayment methods.

If building a property in Northern Ireland is something you’re exploring, reach out to be matched with one of our experts and get a free consultation.

Call 0808 189 0463 or make an enquiry. 

Lenders and rates in NI

In general, there are fewer high street lenders in Northern Ireland and even fewer again who offer self build mortgages. For example, neither Natwest, MetroBank or Santander offer these types of home loans.

Belfast-based AIB will consider applications, based on a 75% loan to value ratio and Progressive Building Society will go up to 80%. A lender will also assess the cost of the land you’re looking to build on as well as the construction or use an estimate of the value of the completed properties.

Most mortgage lenders charge interest rates at a slightly higher rate than on a conventional mortgage owing to the extra admin in providing multiple instalments. You can expect them to sit between 5% and 6% at the time of writing (May 2023).

It’s also important to note, and budget for, a lender’s arrangement fee. Not all lenders apply one, however, but be sure to factor all of the costs in when comparing rates and deals.

Grants available

Building a home from the ground up or renovating an existing structure is always a costly endeavour but thankfully there are a few options the region offers by way of financial support.

Microgeneration technologies grants

Depending on where you’re based in Northern Ireland you may be able to apply for a grant to cover the cost of installing what’s known as microgeneration technologies. This is because they contribute toward lowering carbon emissions. Such technologies might include solar thermal hot water, wind turbines, bio energy and ground source heat pumps.

Northern Ireland Renewables Obligation

If you plan to generate renewable energy in your new home then you could be eligible for Renewables Obligation Certificates. One certificate can be collected per megawatt hour of power created and these can then be sold to electricity supply companies.

£250 Insulation cashback

In a bid to help the country go greener, Energy Store offers £250 if you install cavity wall insulation at a cost of over £300 in your new NI property. There is also an additional grant available for the same amount for loft insulation.

Keeping you warmer

Just like above, Warmfill offers cash grants of £250 towards cavity wall insulation and loft insulation. They also provide hot water tank jackets and LED light bulbs.

Meet with a Northern Ireland-based expert

Building a home can be an exciting endeavour but also a stressful one with multiple factors to consider and elements to coordinate. Helping to mitigate that stress and set you on the path for a smooth self build mortgage application, a broker knowledgeable in the local Northern Ireland market is key.

They’ll swiftly draw up a selection of banks and building societies that offer self build mortgages in the area – saving you time and potentially money – and highlight those likely to offer the best rates and terms, to help you get the best deal.

Call 0808 189 0463 or make an enquiry today to get matched to a local broker and schedule a free, no-obligation consultation.