The change means borrowers will no longer need interim valuations, and, as a result, there is a smaller chance of funds being withheld partway through the build.
As part of the range refresh, the lender has added a two-year fee-free discount mortgage and introduced a 16-month fixed rate deal.
At the same time, Nottingham’s two-year early repayment charge (ERC) free discount product with £1,499 fee has been reduced to 3.80 per cent, from 3.99 per cent.
And two-year ERC-free discount product priced at five per cent is now fee-free.
The mortgages are available through specialist distributor BuildLoan.
Nikki Warren-Dean, The Nottingham’s head of intermediary sales (pictured), said the move into cost-based lending for self and custom-build “is a really positive step in the reinvention of our mortgage lending”.
She added: “We know that having the confidence that money will be available exactly when needed as work progresses is hugely important for self and custom builders.
“Our lending is now linked to the cost of each stage of work, with a guaranteed stage release pattern agreed at application. This cuts out the need for interim valuations, taking away the risk of a customer potentially not getting the funds they expected.
“Lending based on build costs alone substantially reduces the risk of cashflow issues bringing a project to a standstill because contractors can’t be paid, or materials purchased.
“There can be no underestimating the peace of mind confirmed cashflow can bring – in fact it can be key to a successful and efficient self-build project.”
Chris Martin, head of product development and underwriting at BuildLoan, said: “These products meet one of the key needs of a self or custom builder – the peace of mind that they are guaranteed to get the funds they need, at the right time, to get their build completed successfully.”
