Guest blog by Ipswich Building Society
We all know the UK has a chronic housing shortage and, combined with increasing house prices, it’s a difficult situation for would-be buyers and home movers to get a suitable, affordable property – let alone the house of their dreams!
For example, data from the Office for National Statistics shows a UK detached property has increased in price by 4.7% in the last 12 months to £370,000.
If you are considering taking more control of your situation you might have thought about building your own home. Using Modern Methods of Construction could make it easier and quicker to complete your self build project.
Modern Methods of Construction – how, where, why?
Often referred to as MMC, this is where new build housing can be produced offsite in large quantities. By utilising mass production for self build projects, many people could benefit from saving both money and time but still enjoy the flexibility and freedom of designing a home to their own specification.
Whilst MMC brings a new generation of prefabricated housing, it should not be confused with the prefabs brought in after the Second World War to rebuild housing stock.
Some of the mainstream MMC systems include:
- Closed-Panel Systems: these are entire walls which come complete with cladding, doors, windows and ducting for wires/pipes. They are then transported to the site and lifted into place using a crane.
- Open-Panel Systems: this is where the external cladding and joinery is fitted on site, without using a crane, which is useful when access is restricted .
- Structural Insulated Panels (SIPs): these provide excellent energy efficiency as the walls and roof are made from solid slabs of insulation. This idea came to the UK from America in 2000.
- Oak Framing: oak frames are quickly erected and encapsulated with highly insulated panels, often constructed off-site.
There are various ways you can research MMC schemes, including the Build Offsite Property Assurance Scheme (BOPAS). By gaining BOPAS accreditation this means the scheme has been through a durability and maintenance assessment, guaranteeing that properties will be sufficiently durable and readily saleable for a minimum of sixty years.
Support for MMC
It is encouraging to see the government is supporting MMC as a way to address the UK’s housing crisis.
The Autumn Budget 2017 said “the government will use its purchasing power to drive adoption of modern methods of construction, such as offsite manufacturing” and the Office of the Deputy Prime Minister and the Housing Corporation stated it is “… a process to produce more, better quality homes in less time.”
Financing a self build MMC home
Once you have decided to build your own home and researched the various methods available, you may be left wondering how you can finance it.
You may already know about specialist self build mortgages, which have been around for a number of years and offer finance for the ‘yet to be built’. These mortgages may offer features such as lending on the land (so you can keep your savings back for the build) and releasing funds in stages, as the build progresses, so you don’t have to borrow the whole amount from the outset and pay interest on it all from day one. These mortgages are not just limited to brand new projects, and can be integrated into a conversion of an existing property.
You should know that many self build lenders will consider homes built using MMC schemes, such as the mortgages on offer from Ipswich Building Society.
According to the Building Societies Association, “building societies are generally receptive when it comes to accepting MMC as suitable security for mortgage purposes, particularly those that lend in the self-build market as they are more experienced in assessing the potential risks of non-standard construction types.”
It’s also useful to know that many lenders will need you to have a comprehensive outline of your project before you make a mortgage application. Whilst each lender will have their own criteria, here are five things you’ll need to consider:
- Finding a suitable plot of land
- Obtaining planning permission
- Having detailed plans of the property drawn up
- A realistic projection of costs
- The deposit you have saved and how much you need to borrow
A self build project can seem like a big task so if you are in any doubt about the financial side of things, or which mortgage is best, you should consider seeking advice from a specialist mortgage broker.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE