Financing a self-build isn't necessarily easy, especially in this economic climate, but it's certainly possible. Selling your home, or releasing the equity in it, is one option (and ideal for buying the building plot), but many self-builders need a loan for the project, and a self-build mortgage is a popular choice.

With this kind of mortgage, the money is released in stages as the building work progresses. To qualify for a self-build mortgage, you'll have to provide more information than for a standard residential mortgage, including the plans for the new house, the projected build costs, and proof of planning permission. If you haven't sold your home and want to continue living there during the build, you can have a self-build mortgage alongside your existing mortgage, as long as the figures stack up.

And as with any big building project, it's important to have a sizeable contingency fund in case anything goes wrong with your finances or the build. The good news for self-builders is that they can claim back the VAT on the building materials used, which is one of the reasons why self-building can work out cheaper than buying a house.

The building method and materials you choose will have a big impact on the cost of the project, although there are, of course, practical and aesthetic considerations as well as financial ones.

Timber-frame houses are popular with self-builders because they can be erected quickly.

Wood is also natural, environmentally friendly and aesthetically appealing. And it's more durable than you might think - softwood frames can last around 200 years. Frames made of softwoods, such as Douglas fir, are cheaper than those made of hardwoods, such as oak, but oak is commonly used and can be expensive. Another disadvantage is that the timber frame can restrict what you do with the design of the house, because the structure has its limitations.

An alternative to a timber frame is a steel one. Steel frames allow more flexibility with the design and are strong, resistant to the weather and quick to put up.

While steel or timber-frame houses are good choices, there are many other building methods to consider. Alternatives include brick and block, where houses have internal blockwork walls and external brick or stone ones; straw bale, where the bales are usually covered in render; permanent insulated formwork systems, such as Beco Wallform's, which are a quick and practical way of building insulated walls; cob, where a straw, earth/clay, sand and water mixture is used to form walls; adobe, where a similar mixture is shaped into bricks; and rammed earth, where walls, floors and foundations are formed by compacting an earth mixture.

You may know which building method you want to use, or you may be happy to be guided by your architect, but the method and design obviously have to be compatible.

One of the great things about self-building is that it's easy to make your new home environmentally friendly. Period houses and flats tend to be difficult and costly to make energy efficient because they were built long before energy efficiency was a consideration, but building methods and materials have become a lot greener in recent years.

As well as obvious things such as insulating as much as possible and choosing energy-efficient windows and glazing, self-builders can incorporate big eco home improvements, such as solar panels, heat pumps, grey-water recycling systems, and biomass boilers, in a much more cost-effective way than homeowners who have to retrofit them.

Combine measures like these with environmentally friendly building materials and you can create an extremely green self-build, which is good for your bank balance, because it keeps your energy bills down, and good for the planet.

Product of the week

The Defender Rechargeable LED Hand Lamp (£35.99, Screwfix) is a good way to see when DIYing in poor light conditions.

It's great value compared to many similar work lights, where you have to buy the light, charger and battery separately, and has 26 bright, energy-efficient LED bulbs (you can have all or just 14 on, giving six or three hours of continuous use) and a shatterproof body.

It can sit upright on a table, floor or bench, hang from a hook, or be handheld - because there isn't a separate battery and the base comes off, it's lightweight and comfortable to hold, and continues to work when charging.

How-to tip

Cavity wall insulation (insulation injected in the gap between your home's external and internal walls) saves you money because it keeps the cold out and heat in.

As a general rule, properties built from the 1920s onwards have cavity walls, but take a look at your home's brickwork to be sure.

If the bricks are a mix of long and short ones, it doesn't have cavity walls, but if the bricks are all long, it does.