The lender said: “Dream of building your own home, but worry about the complexity and project management that comes with a self-build project?
“Custom build could make your dream home happen. Built on serviced plots of land with pre-existing planning permission and utilities (gas, electricity etc), it’s less ‘hands-on’ than traditional self build.”
Virgin Money custom build loans are available to all intermediaries, with loans submitted via BuildLoan, acting as a master broker.
BuildLoan will pass on procuration fees to an intermediary submitting applications through the master broker.
A supplementary fee will be paid to BuildLoan for the additional services they provide to review plans and finances related to the build, as well as managing the customer throughout the construction of their custom build home.
According to Moneyfacts, several building societies including The Buckinghamshire, Chorley and District and Newcastle are also willing to lend into self and custom build. (see full list below)
Virgin Money is offering 90% Loan To Value (LTV) on shared home ownership and 85% on custom-build.
On custom build it is offering an interest-only product for up to two years, with a capital and repayment switch after that or an early repayment charge-free remortgage.
The range includes a three-year tracker rate at 80% LTV available at 4.79% with a £1,995 product fee and a three-year tracker rate at 85% LTV available at 4.99% with a £1,995 product fee.
Virgin is offering a two-year interest-only option with a repayment switch after that or a remortgage to another of the lender’s products once the build is complete with no early repayment charge. The lender is also offering to cover the cost of indemnity insurance at an average of £1,300 to protect the completion of the build, which is often the customer’s liability.
Virgin has also launched a new range of shared home ownership mortgages allowing borrowers to buy an initial share of between 25% and 75% of a home and pay an affordable rent on the remaining share owned by the housing association.
For every custom build mortgage completion, Virgin Money and its partners, which include Countrywide, Eversheds and Buildloan will donate £150 to Crisis to help someone get back on their feet.
Location, location, location
Potential custom builders need to find a local site and choose a serviced plot of land and a builder, then the consumer picks the size and design of the home.
Peter Rogerson, Virgin Money’s director of mortgages, said: “Virgin Money is committed to getting Britain building and helping more people achieve their dream of home ownership.”
Alok Sharma, housing and planning minister said: “Shared Ownership and custom-build housing can play a crucial role in this, helping to deliver the homes people want and supporting first-time buyers.
“That is why it’s great to see Virgin Money launching a new range of mortgage products to support aspiring custom builders design their dream home and those wishing to buy through shared ownership.”
Rachel Pyne, BuildLoan operations director said: “We’re delighted to work with Virgin Money on custom build. Together with our intermediary partners we’ll give customers real choice and put them in control of designing and building their dream home.”
Currently, in the UK around 12,000 self and custom-build units are being built each year, with the government targeting roughly 50,000 per annum, said Legal and General new-build manager Craig Hall.
“Small-to-medium sized developers are seen as providing a key role in driving on this sector,” he added.
Legal and General ran a conference in 2015 to educate lenders on prospects for the custom build sector and in October 2016 the government launched a custom build register allowing homeowners to register their interest in land in particular areas.
A full list of custom-build lenders
• Bath BS
• Buckinghamshire BS
• Chorley BS
• Darlington BS
• Furness BS
• Hanley Economic BS
• Holmesdale BS
• Mansfield BS
• Newcastle BS
• Virgin Money