Scottish Government has announced its new Self Build Loan Fund, which enables anyone who wants to build their own home to apply for lending from the £4 million self-build loan fund.
The product builds on the success of the Highland Self Build Loan Fund, which helped people build their own homes and builds on a strong Scottish tradition in rural areas.
The scheme will run for three years and offers loans up to £175,000 to help with the construction fees for self-build projects, both urban and rural.
Specifically, it is open to applications from individuals who have been unable to obtain mainstream self-build mortgage finance, but who will be able to obtain mainstream mortgage finance upon completion of their project.
Lent by Scottish Government, the fund, which is delivered by the Highlands Small Communities Housing Trust as agent, is effectively a loan of last resort. As such, it’s bridging finance for the period of the build, secured via a Standard Security over the applicants house plot/future house
Drawdowns are released in stages in line with the agreed build programme and accompanied by the Professional Advisor’s Certificate.
However, the fund is not available to purchase house plots, as the plot needs to be fully owned by the applicant in order to provide security for the loan.
This effectively means that it’s a route to funding to complete a build, but not to start off on a Self-build from scratch, which NaCSBA feels is a missed opportunity.
Scottish Housing Minister Kevin Stewart said: “We know that people are interested in building their own homes and in some cases, it is the best way for families to tailor their homes to their needs. However, we also know that it can be tough to secure funding and get the right advice, which is why we set up the self-build loan fund to help those that need to access finance.
“Following a successful pilot in the Highlands, we decided to roll the fund out to people across the country. This is now open for applications and I want to see people across Scotland apply and make full use of this fund.”
NaCSBA’s Representative for Scotland, Wales and Northern Ireland Angela Doran said, “It’s fantastic news to see that, after ongoing lobbying by NaCSBA, Scottish Government will be rolling out the Highland Self Build Loan fund across the whole of Scotland.”
To apply, people need to meet a set of criteria:
- Demonstrate that they have been unable to obtain mainstream self-build mortgage finance for a new home (not a conversion or extension); and
- Intend to occupy the property as their sole and only residence; and
- Own a house plot which is unburdened (i.e. no mortgage finance or ranking agreement); and
- Have Full Planning Permission in place and be ready to apply for a Building Warrant; and
- Have a defined elemental build cost and construction programme; and
- Be able to demonstrate that they will be able to obtain a mainstream mortgage upon completion of their build.