09 Nov 2021

Faster, Simpler and More Efficient – The Future of Self-build Mortgages is Finally Here

In this article, Max Mace, Managing Director of NM Finance, looks at the raft of competitive and innovative self-build mortgages that have come to the market post-pandemic.


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Remember those heady days before the pandemic? A time of freedom, nostalgia and slow, confusing and uncompetitive mortgages for anyone who wanted to build their own dream house?

The UK mortgage industry is over 100 years old, and has been creaking at the seams for decades. And, with self-build mortgages making up so few of all UK mortgages, it’s inevitable that this niche would feel the brunt of this most.

However, in news that should put a spring in the step of everyone with a self-build dream in their hearts, we can see this changing in front of our eyes. Fast.

For, while pandemic uncertainty led to lenders focusing on steadying the ship, a raft of new self-build products have come onto the market in the past three months, offering more innovation than the sector has seen for years.

And it’s likely to continue, as while the past 18 months have been unflinchingly hard for the self-build community, a quiet tech revolution took hold, making the future of mortgages happen today.

The result? An emerging market of competitive, innovative and customer-first self-build mortgages which offer more value to self-builders than ever before.

We see this in the ever-growing number of green-first mortgage products, driven by not just EPC ratings but also rewarding eco-conscious self-builders who choose sustainable options, like renewable energy sources.

And it’s about time, as there are few communities more committed to environmentalism than the self-build community. Moving forward, we expect to see this eco-friendly approach continue to expand and see carbon-neutral builders receive the biggest rewards in terms of rates, fees and terms.

Likewise, we are now seeing a notable increase in products for self-builders who want to transition early out of their self-build financing into a regular home mortgage.

Most self-builders tend to do this before their fixed period is up, to benefit from better options, but historically they’ve been punished for this by lenders, with heavy early repayment penalties. Now, there are so many new products on the market with zero early repayment charges, that we rarely recommend a mortgage outside of these.

And talking of innovation in financing, we are seeing a trend towards lenders backing self-builders by getting their payment tranches to them earlier in the process – and thereby reducing that difficult period when a self-builder needs to get the next stage completed, but can’t for financial reasons.

But, for me, the most exciting development that has been achieved in the past two years alone is the speed and simplicity we’re now able to offer those that want to finally realise their self-build dream.

For decades, it’s been a minimum of 12 weeks to get through a slow and cumbersome process, and for many self-builders, they’ve waited so many months that they’ve eventually pulled out of following their dream.

However, thanks to technology advances from the likes of the mortgage sourcing and application platform Twenty7Tec, the process is now radically faster, simpler and more efficient. This means that we’re now regularly overseeing self-build mortgages in just four to six weeks. That’s more than halved the average time.

This hasn’t gone unnoticed by lenders, and we’re now seeing both larger and smaller lenders desperately keen to join this technology revolution, integrating closely with tech providers. This means less admin and less chance of things falling through mid-process.

All of this means that we now have the opportunity to spend significantly more time with self-builders when they’re in the most critical phase of their mortgage journey – the decision of which product to choose.

Thanks to the technology innovation behind the scenes, mortgage brokers, like NM Finance, now only input a small amount of required data once, and then moments later, we can see all the available products for the customer. Rather than repeat admin, like we used to have to do, we can now spend the rest of the time actually talking to the customer about what’s best for them and their lives.

Ultimately, it’s clear that we’re at the outset of a new era of self-build mortgages where technological innovations are radically changing the game for all. The genie is out of the bottle, and this can only be good for those who value the best choice and personalised options for consumers.

But, personally, it’s not the remarkable technology that is the most important factor at play here. It’s that this tech allows mortgage advisors to spend more time helping the people who dream of their own built home. This has been the biggest game-changer of all.

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