Borrowers are turning to self-builds for more control and energy efficiency, but lenders warn the complexity demands expert brokers and careful planning
The self-build market continues to gather momentum across the UK, as limited housing supply and growing interest in bespoke, energy-efficient homes draw more borrowers towards this once-niche corner of the mortgage sector.
Suffolk Building Society has reported “continued growth” in its self-build mortgage business, noting a significant rise in larger loan applications. In comments previously issued by the society, head of customer proposition Alex Austin said that “since December 2024, one in seven of Suffolk’s applications has been for over £1 million while five years ago this figure stood at one in 17.”
Austin also noted that many current enquiries from the lender’s broker network concern self-build projects. Mortgage Introducer has approached Suffolk Building Society for updated comment.
Lifestyle ambitions and rising complexity
Much of the renewed appetite for self-build appears to stem from a desire for individuality and sustainability. Andrew Johnson of YES Mortgage Services said: “The increase [in self builds] is due to more lifestyle choices, open plan etc and to get more energy efficient properties.”
He added that “the best lenders for this are the smaller building societies and really support this sector and are very helpful, they understand the process from start to finish.”
However, Johnson acknowledged one key obstacle: “The hardest part of self-builds is getting the plot initially, with or without planning. Most plots are bought by developers and councils could help with setting aside new plots for self-build clients.”
Expert guidance essential
While demand is rising, lenders warn that self-build finance is far from straightforward. Austin cautioned that it is “imperative that self-builders obtain robust costings for the project and factor in a contingency amount.”
He added that “between 10 and 15 per cent is typical, and this should allow for any unexpected costs or material price rises, therefore an expert lender and/or broker is essential.”
Austin also emphasised that the structure of funding needs to be understood from the outset: “Borrowers will need to know from the start whether their stage payments will be in arrears (so after the build has started) or in advance. Getting this wrong means the project, quite literally, won’t get off the ground.”
Industry perspective: the view from lenders
Steve Barber, of Bridging Finance Solutions, said that much of the current activity involved the redevelopment of existing plots. “The majority of self builds we are seeing is ‘infill’ of large gardens which are no longer required or able to maintained, with planning granted for a property on an existing site and sold on,” he said. “They are generally lifestyle choices albeit customisation is often restricted by the surrounding properties and planning permission ‘in keeping’ with the locality.”
Barber emphasised that such projects are far from straightforward. “Self-build mortgages are complex and many brokers do not have construction experience to allow for full, detailed applications at the outset of an application,” he said.
“This complexity is increasing with different methods of construction becoming violable on the market, some of which are not accepted as standard methods of construction and therefore mortgageable over a 15–20 year term as the economic life of the method of construction has not been tested for the time.”
He added that underwriting “will be considerably more in depth than a standard mortgage application with more parties involved and communication between clients, broker, valuer, monitoring surveyor, solicitors and contractors is critical.”
Barber also cautioned that borrowers frequently underestimate the technical and regulatory challenges involved. “Borrowers are often not construction professionals and under estimate the complexity of regulations in respect of surveys, planning conditions, building control etc,” he said.
“It is generally beneficial to pass over the project management to an Architect who will liaise with the Lender’s MS throughout the scheme and theses costs are often not factored into the equation.”
A growing but specialist market
Although still a specialist lending segment, industry figures suggest that self-build is becoming a more realistic option for a broader range of homeowners. According to the latest government data on self-build and custom housebuilding, 64,851 individuals were registered on England’s self-build and custom-build register as of 30 October 2024 - a 2 per cent increase on the previous year.
Its appeal lies in the freedom to design and build a property that meets personal and environmental priorities, but only for those prepared for the detailed oversight and planning it demands.
With more borrowers seeking tailored routes to homeownership, brokers equipped with construction knowledge and specialist lender links may find growing demand in this evolving segment.
