The self and custom build sector holds huge potential to diversify housing delivery and create more affordable, sustainable homes tailored to individual and community needs. However, access to the right kind of finance remains one of the biggest enablers and barriers to success.

At BMSL, the UK’s leading self-build mortgage specialist, we’ve spent over 26 years supporting over 30,000 individuals and families on their homebuilding journey. In this note, we set out how self-build mortgage products, particularly those offering guaranteed stage payments, are essential to unlocking affordability and managing risk in self and custom build.

What is a Self-Build Mortgage?

Unlike traditional mortgages, which release a single lump sum upon completion of a home, self-build mortgages release funds in stages throughout the construction process. This structure reflects how costs are incurred and helps manage cash flow as the build progresses. Each project has a bespoke cashflow however,

Typical Mortgage Stages Include:

• Land purchase
• Foundation and groundworks
• Wall plate and roof (wind and watertight)
• First and second fix (internal works)
• Final completion

With most products, borrowers only pay interest on the funds drawn down, making this a cost-effective way to fund affordable housing projects. 

Types of Stage Payment Mortgages

1. Guaranteed Stage Payments (Exclusive to BMSL)

BMSL has developed mortgage products with guaranteed stage payments, which release funds at pre-agreed points in the build, regardless of site value. This is essential for keeping projects on track, especially where affordability is key.

Two types of guaranteed payments:

• Advance Stage Payments: Funds are paid before each stage ideal for covering deposits, ordering materials, when using offsite manufactured systems or meeting supplier terms.
• Arrears Stage Payments: Funds are released after each stage, but the release is guaranteed, providing certainty that you will have the funds to pay your suppliers and contractors.

These options ensure that both low-deposit borrowers and those managing tight budgets can proceed with confidence and avoid costly delays.

2. Valuation-Based Stage Payments

Many self-build mortgages operate on an arrears stage payment basis, where funds are released after each build stage is completed and valued.

Key Issues:

• Upfront Costs: You must fund each stage yourself before receiving any mortgage drawdown, creating cash flow pressure.
• Valuation Delays: Funding relies on timely and favourable valuations. Any delays or shortfalls can disrupt the build.
• Complex Projects: Renovations and conversions may not always match lender valuation models, complicating fund release.
• Limited Accessibility: This model is less suited to first-time builders or those without access to significant upfront capital.

These challenges highlight the need to consider alternative models, such as advanced stage payments, which release funds earlier and ease cash flow constraints.

Matching Mortgage Models to Build Routes

Different self and custom-built routes present different financial needs:

BMSL matches each project’s unique build route and budget with the most suitable lender and mortgage product, including exclusive access to options requiring as little as 5% deposit on build costs.

Tips for Success in Affordable Self-Build

• Start Early: Speak to BMSL before purchasing land to understand your borrowing power.
• Budget Realistically: Always include professional fees, contingency (10–20%), and VAT where applicable.
• Design to Budget: Work with your finance provider and designer from the outset to align your build with what you can afford.
• Use a Specialist Broker: BMSL offers whole-of-market access and exclusive deals not available elsewhere.
• Cashflow is Key: Choose a mortgage structure that reflects when costs are incurred, not just when value is added. 

Common Pitfalls to Avoid

• Underestimating upfront payment requirements for off-site or specialist systems
• Omitting key costs (e.g. planning fees, warranties, site services)
• Designing without a clear budget in place
• Relying on traditional mortgages unsuited to phased construction
• Choosing a lender unfamiliar with self or custom build

 Why Buildstore Mortgage Services Limited?

BMSL is uniquely placed to support the self-build market, offering:

•  26+ years of specialist experience
• Exclusive mortgage products with low deposits and guaranteed payments
• Access to every lender in the market
• Build costs assessment
• Bespoke cashflow modelling for each project
• Support for affordable, off-site, and custom-built routes

Whether it’s a first-time builder on a tight budget or a community-led project tackling housing need, BMSL provides the financial tools and expert guidance to make self and custom building viable, sustainable, and affordable.

Working with NACSBA and the Sector

BuildStore welcomes continued collaboration with NACSBA, local authorities, and sector stakeholders to:

• Provide policy input on financing options
• Support plot developers and enablers with finance-ready buyers
• Educate consumers on affordable self-build finance
• Strengthen the case for broader lender participation in the market

For more information or to explore partnership opportunities, please get in touch with our team.

BuildStore Mortgage Services
The UK’s Self and Custom Build Mortgage Specialist

www.buildstore.co.uk

0345 223 4888