The lender is offering a 1% discount on the mortgage rate, meaning variable rates start from 4.59% on an interest only or repayment basis, for a period of up to two years.
It has also cut the product fee in half from 2% to 1% for the duration of the sale. Once the build has been completed, borrowers can apply to switch to any of its other residential mortgage products available at the time.
Saffron said it would consider covering the full cost of the work subject to a maximum 75% of the gross development value. Payments will be released in stages that can be tailored to each individual project.
All applications are individually assessed by an underwriter and the self-build mortgages are available from £30,000 up to £500,000. Applications of up to £1m will be considered on a bespoke basis.
Anita Arch, head of mortgage sales at Saffron, said: “Spring is traditionally the time when self-build projects get underway and we therefore thought a mortgage sale would be a welcome offer. I have no doubt this will prove to be popular with anyone thinking about building their dream home or converting or refurbishing an existing structure.”
The lender said approximately 12,000 self-build homes were constructed each year in the UK, but the government wants that number to double over the next 10 years. Legislation came into effect in October that stated local authorities must grant planning permission in order to satisfy demand from self-builders for development ready plots in their area.
Saffron referred to the German market as an example, saying it generated 100,000 new self-build or custom build homes every year, which met approximately 50% of its new housing requirements.
Self-build is becoming a compelling option despite a limited number of products on the market, experts have said.
