sblf crofter factsheet july 2021 draft · 2021. 7. 12. · the self build loan fund (sblf) is a...

The Self Build Loan Fund (SBLF) is a ScottishGovernment initiative, providing a time limitedfund (September 2018 to August 2022) to assistself builders where they have been unable toobtain mainstream self build mortgage finance.The fund is available Scotland wide in order tosupport additional housing provision across bothrural and urban areas.

Eligible individuals can borrow up to £175,000,which they can draw down in staged paymentssimilar to a traditional self build mortgage.Borrowers must provide a Professional AdvisorsCertificate at each stage of drawdown. The SBLFis designed to fund the construction phase of anew home, and once this is completed, theborrower will repay the loan either via amainstream mortgage or by using the equityfrom the sale of their existing home.

Self Build Loan Fund

Fact Sheet

Fact sheet for crofters July 2021

What is the Self Build Loan Fund? How does the SBLF work in practice? CHT will assess applications to the SBLF through atwo stage process:Stage 1: We will consider the applicant's financialcircumstances and ability to proceedStage 2: We consider the applicant's constructionapproach and the viability of the project. Only if both stages are satisfactory, will we consideroffering applicants a loan. This process ensures thatthere is sufficient equity in the completed build andthat the applicant can repay the loan. The loan fromthe SBLF is to make up any shortfall in theapplicant's contribution to the build cost of theproperty. A Croft House Grant can form all or part ofan applicant’s contribution.

We will expect borrowers to follow standardindustry practice, with an architect, surveyor orengineer monitoring their project. We alsorecommend that they take out a new homewarranty to further increase the availability ofmortgage products, should you seek mortgagefinance to repay the loan. Upon receiving thecompletion certificate from Building Control,

Communities Housing Trust (CHT)have been appointed to administerthe SBLF on behalf of the ScottishGovernment.

Fact Sheet

Self Build Loan Fund: Fact sheet for crofters

How does the SBLF work inpractice? continuedthe borrower begins the process of re-financing,either using the sale proceeds from their existinghome or seeking mortgage finance to repay theloan to the Scottish Government. The ScottishGovernment then discharges its Standard Securityover the site. If you choose to repay the loan withmortgage finance, your mortgage provider willthen register their own Standard Security over yourhome.

Given a Standard Security is required to secure theloan from the Scottish Government, the house plotrequires to be de-crofted prior to any loan beingoffered from the SBLF. The crofter will need tocontact the Crofting Commission regarding de-crofting http://www.crofting.scotland.gov.uk/faq

It is common practice during the de-croftingprocess for a Standard Security to be attached tothe newly de-crofted site. When granting a loanthrough the SBLF, this existing Standard Securitywill take second place to the Standard Security infavour of the Scottish Government securing theloan. This is achieved using a Ranking Agreement.

Please note that an application made under theSBLF does not affect your ability to apply for a CroftHouse Grant. Any crofter interested in applying forthe Croft House Grant should contact the ScottishGovernments Rural Payments and InspectionsDivision in Tiree, tel: 01879 220245

https://www.ruralpayments.org/topics/all-schemes/croft-house-grant/

Whilst both the Croft House Grant and Self BuildLoan Fund are Scottish Government initiatives, theyhave different terms attached to them in relation toeligibility. However, both schemes can be usedtogether to assist you in delivering your new home.

How does this affect an applicationfrom a Crofter?

Please note that there are ongoing conditionsattached to the Croft House Grant that are in effectfor 10 years after completion of your home, whichwill be independent from any conditions attachedto the SBLF. Applications received in relation to theSBLF that also include assistance from the CroftHouse Grant will be discussed with the ScottishGovernments Rural Payments and InspectionsDivision.

Who is eligible?

Demonstrate that you have been unable toobtain mainstream self-build mortgage financefor a new home (not a conversion or extension);and Intend to occupy the property as your sole andonly residence; and Own a house plot (such as de-crofting); andHave Full Planning Permission in place and beready to apply for a Building Warrant; and Have a defined elemental build cost andconstruction programme; and Be able to demonstrate that you will be able torepay the loan upon completion of your build.

The SBLF acts as lender of last resort, where theapplicant has been unable to secure a mainstreamself build mortgage. It can be repaid either throughobtaining a mainstream mortgage uponcompletion or through the equity arising from thesale proceeds of your existing home.

They must however demonstrate that they canaccess mainstream mortgage finance uponcompletion and applicants are advised that theyseek independent mortgage/financial advice in thisregard.

To apply you need to meet the following criteria:

Please note that the SBLF is a discretionary scheme, with no guarantee of assistance.

Get in touchNeil Walker, Self Build Loan Officerselfbuild@chtrust.co.uk01463 572 030www.chtrust.co.uk/scotland-self-build-loan-fund