The new option allows custom and self-builders to borrow up to 85% of their land and build costs, and up to 80% of the value of their new home.

It offers the opportunity to have each stage of funds linked directly to the cost of each element of the build, which are released to the client before they start the work.

The stage releases of cash are agreed upon during the initial mortgage application process and are not reliant on valuations during the build, thus allowing clients to develop without fear of a down valuation interrupting cashflow.

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Chris Martin, head of product development and lender relationships at BuildLoan, said: “Our cost-based products really come into their own at a time when we expect to see downward pressure on property prices, which may lead to valuers taking a cautious approach to site values.   

“The last thing a self-builder needs is for their cashflow to be disrupted by a low site valuation, which means they don’t get the money they need to progress their build.
“This new product provides a perfect solution — the funds are pre-agreed, so the client knows exactly what they will get at each stage of their project.”
Stuart Bryce, head of business development at Chorley Building Society, added: “We are committed to supporting the self and custom-build sector, as it provides an important contribution to generating the much-needed increase in construction of new homes.  
“Providing funds up-front at each stage of the build provides a real boost to cashflow and enables many clients to build where otherwise it would have been impossible.
“With no need for any valuations during the build, the product also removes the doubt inherent in some self-build products, which rely on the property being valued at each stage to determine how much money can be released to the client.”