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How to finance building your own home

If you want to build your own home from scratch, you're going to need a lot of cash at your disposal. Discover what finance and loans are available on the market today with our guide.

5 min read

Many of us dream of building our own home but often this can feel like a distant fantasy. However, you don’t need to be a millionaire to get your hardhat on. There are plenty of finance options out there which can help everyday families build a space for themselves.

If you’re looking to self-build, here’s what finance options you’ll have available...

How to finance building your own home

1. Use personal savings

The most obvious way to finance a new build project (or any project) is to have a big pot of cash. For many, this will be pretty inaccessible, but it could be an option for those who have the savings or who might have come into some inheritance funds.

If you are using cash, remember these important tips…

  • Self-build projects typically take over two years to complete, so make sure your savings are earning as much interest as possible during this period.

  • To be fully protected by the Financial Services Compensation Scheme, you can’t have more than £85,000 (per person) with any one banking institution.

  • Make sure you can always access your funds, this means putting your money in access savings accounts (which typically offer less interest but more flexibility).

2. Sell your existing home

If your home has increased in value over the years, selling it could be a smart option to get the funds you need.

First, you’ll need to have your home evaluated to understand how much equity you have to play with. For those living in the South East, specifically in the London area, in just ten years the value of your property may have doubled. However, not all areas of the UK are so blessed and homes in the North West, for instance, have seen prices stagnant in recent years.

You’ll also need to consider…

  • How much do you need to cover the selling costs?
  • Where will you live while the project is underway? What costs will temporary accommodation rack up?
  • How much of your mortgage have you paid off? How much actual money will you receive from the sale?
  • Will selling your home cover all the costs or will you need to supplement your funds some other way?

3. Remortgage your existing home

There are mortgages specifically designed to cover self-build projects, however, remortgaging might be the more cost-effective solution.

Providing you have no ERCs (early repayment charges) and have significant equity in your home, remortgaging your existing property is likely to provide more favourable interest rates than a self-build mortgage (more on this below).

However, as with all finance options, there are things you need to consider…

  • Do you plan on selling your home once the build is completed or renting? If you plan on selling, you’ll need a remortgaging deal which only lasts roughly 2 years.

  • Lenders don’t love providing remortgages for self-builds, as they’re seen as risky. Therefore, you may have to shop around to find a good deal and it could be worth getting a property finance specialist onboard.

  • If you can’t raise enough money through your existing equity, you might consider using the money from your remortgage as a deposit for a bigger loan.

4. Self-build mortgage

As the name suggests, these mortgages have been created to specifically suit a self-build project. However, this doesn’t mean they’re always the best option and they have some pretty big drawbacks.

Like traditional mortgages, you’re borrowing against the value of your home, only in this case, your home doesn't exist yet. Because the value of your project goes up the further along you are, self-build mortgages release money in stages and only once key milestones have been met. These milestones will be pre-agreed before your project takes place.

How much you can borrow will depend on two things: your deposit and how much the bank believes you can afford to borrow.

On the surface, this works like a normal mortgage, however, because lenders view it as an added risk to lend against a self-build, rather than a completed home, the deposit you’ll need is much higher - typically 25% of the project’s value.

On the whole, it’ll be cheaper to borrow against your current home or to sell it, rather than take out a self-build mortgage. However, if you do go down this route, we recommend converting this to a traditional mortgage once the project is complete.

A render of a new build

Costs to bear in mind

Before you choose a finance route, you first need to work out how much money you’ll actually need. This can be pretty tricky for anyone who hasn’t undertaken a self-build project before, as there are a lot of factors and hidden costs to consider.

For this reason, we always recommend you get tailored advice from an expert. At Resi, we provide free consultations so you can start your project knowing what’s what. Book yours here.

However, if you’re still in the early stages and just want some rough cost estimates, we’ve still got you covered.

In 2020, we estimate the cost of building your own home to be between £1,800 and £3,000 per square metre.

You’ll also need to account for 15% to cover the costs of the professionals involved (architect, structural engineer, ect), plus a further 10% as a contingency fund.

Learn more about the cost of building your own home.

How Resi Finance can help

At Resi, money is one less thing to worry about. We have a team of in-house advisors, who are always on hand to help you find the right finance route for you - even for new builds!

Our Finance service has access to over 90 different lenders, allowing our team to guide you towards the right deals and rates for you. They can also ensure you get the right amount of funding at the right time and avoid any nasty financial surprises.

What’s more, we even cover insurance and the warranties for your build - giving you and your dream home robust protection throughout.

Learn more about Resi Finance here.


We work with BuildLoan, who specialise in self-build and renovation mortgages. They’re the UK's leading provider of construction based finance, and combined with our own experts, are able to put together a finance package tailored to you.

Learn more about Resi’s new build service.


When it comes to funding your self-build, there are three main options available to you…

  • Cash
  • Selling your existing home
  • Remortgaging
  • Self-build mortgage

Finding the right one for you will depend on both your personal circumstance and how much equity and savings you have at your disposal. If you're not sure which route is for you or you’re uncertain about how much money you’ll need, our team is always on hand to provide you with tailored advice.

See how much you can borrow

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