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Get building with Britannia

Britannia Building Society is laying new foundations in the mortgage market with the introduction of the self-build mortgage.

Self-build is aimed at people who are looking to build a house from scratch and has been introduced in co-operation with self-build specialists Buildstore, formerly known as the Self Build Advisory Service, which offers advice on building your own house and which building companies to use.

The mortgage will have an interest rate that will start off at 1.65 per cent above the Bank of England base rate. After the first year this will reduce to 0.85 per cent above the base rate for five years, and then 0.7 per cent above the base rate for the next five years, before settling at 0.55 per cent above the base rate.

For self-build mortgages there are five key stages of building a house. First the land must be purchased, then the foundations put down, the walls erected, the roof put on and the interior walls plastered. Tranches of money are released at different times to coincide with these stages.

There are 36 other lenders operating in this market, but unlike many of the others, the Britannia mortgage will provide up to 95 per cent of the value of each stage before they are started. The others tend to release funds after different stages of construction, from land purchase to putting on the roof.

According to Buildstore an estimated 20,000 self-build mortgages were taken out in 1999, making up 12 per cent of all new houses built that year. The Britannia mortgage is not unique as it relies on the Buildstore accelerator scheme, which helps borrowers to identify land to buy as well as suppliers of building materials. Accelerator is also available to customers of Bradford & Bingley and Mortgage Express.


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