There's no place like a DIY home

BUILDING your own home is the dream of many and the worst nightmare of others. But people do succeed with their ambitious projects - and without too much anguish.

However, when planning to build your own house, there will be many hurdles to overcome, including finding a suitable plot of land, sorting out the finances of the project and then watching, with heart in mouth, the foundations go in and the roof go on, hoping that all the necessary building regulations are complied with and passed.

If all goes well you can make a saving - depending on how much of the work you do yourself - of up to 30 per cent on the value of the house. The majority of self-builders, however, choose to project-manage the operation, sub-contracting out the hard labour.

At the annual National Self Build Homes Show at Alexandra Palace, north London, last weekend, a record number of visitors attended and recent VAT returns showed there was an increase of 9 per cent of self-builders in 1994 compared with the previous year.

Self-builders can claim back VAT on much of the building materials. The local VAT office sends out a VAT claim pack for DIY builders.

Last year zero-rating was extended to the conversion of dilapidated buildings such as barns or offices into residential homes. Before that it just applied to new constructions.

One of the biggest problems with building your own home is trying to persuade lenders to loan you the money. Although people have been DIY- ing it for many years, some lenders are reluctant or just will not lend money for this sort of project.

This is understandable as most mortgages are given against the value of an existing house. Self-build mortgages are given in stages, reflecting the value of the building as it progresses.

A lender likes to see financial commitment from the borrower and will usually only lend up to 75 per cent of the property as it is being built. Some lenders will not lend money on the land's value, others usually lend from 50 to 75 per cent.

The TSB has been offering stage payment mortgages since the Eighties. "We have a high level of commitment to the self-build market," says David Bexon, marketing manager of the TSB. "We are prepared to offer up to 95 per cent of both land value and end value because, providing the customer is good enough to repay the loan and the project is sound, we do not feel we should differentiate from any other mortgage."

The TSB lends in four stages, although it will be flexible and increase this to five if necessary. The first stage is land purchase, the second when the foundations and services are installed, the third when the building is wind and water tight, and the final one on completion.

Build It magazine organises monthly road shows around the country where self-building can be discussed with professionals. The next one will be in Edinburgh on 14 and 15 October, the one after that at Plymouth on 18 and 19 November.

Some mortgage brokers who specialise in arranging self-build finance include Delta UK (01323 417666), Jigsaw (01787 223162) and Regentsmead (0181-951 1996).