Advice needed with financing a self build

[LeighW]

I’ve managed to get hold of a building plot. The planning is all in place, in fact the house has been started and footings are in place up to the blue brick line. I have friends in the building trade who are going to run the whole project for me, build cost will be around the £80k mark (quotes promised to me by this weekend). The actual plot is costing me £70k (valued at £80k), but I don’t have to pay for this until the build is completed and I’ve sold my current house (land belongs to my other half’s grandmother, hence the good deal).

The house once completed will be worth in the region of £190k, maybe slightly more, so this is an opportunity I can’t miss. My current house is worth realistically around £125k, and I have a mortgage of £80k. My current lender (Nationwide) would lend me up to £180k in total for a straight forward mortgage, unfortunately they won’t lend for a self build. They will lend me up to 95% of the value of my current house, so that would get the build underway if needs be. Build time is (I’m promised) 4 months.

I really want to be able to stay in my current house whilst the new one is built; the alternative of lodging with the in-laws is there, but I’d rather not do that if I can help it… I’d ideally like to start the build, and at the same time get my house on the market, hopefully selling it in time for the new one to be finished.

So what are my options, is there a lender out there who could meet my needs? I’d really prefer to borrow on an interest only basis, then settle the loan completely once the house is finished and mine is sold, although I could make the monthly repayments on this loan if required. I want to transfer my existing mortgage (I’m 3 years into a 10 year fixed rate deal) onto the new house at this point, then have an additional mortgage to cover the extra £25k or so (assuming £150k total cost of build, and £125k proceeds from my house) .

Any advice would be welcome, or pointers to a good mortgage broker who can help.

[mk1fan]

You should have sorted this before you started work.

If your current mortgage won't allow Self Build then you'll have to get a bridging loan to cover the cost of the build. Then sell you house and transfer the mortgage to the new house upon completion.

That seems the simplest arrangement to me.

Or. Sell you house now, clear your mortgage and arrange a self build mortgage.

[satans worm]

Firstly, the promised build time of 4 months will slip, especially as, by the time you buy it, you will be in the winter months!

Also, I'm sceptical of this good 'deal', if it was a done deal at making 40k in 4 months why wouldnt a builder buy it instead??

As far as finance goes, look up build store, they lend you in advance of each stage, we used them, they are good but you do pay a premium for the upfront fees (note they are a broker only, you could goto Skipton direct who do the actual morgage, also, IRRC Lloyds do something for selfbuilds)

From your figs I assume this house will be about 1000sq ft?

Bottom, line, double check your figs with independant sources!

Edited by satans worm on Thursday 11th June 12:38

Edited by satans worm on Thursday 11th June 12:39

[LeighW]

mk1fan said:

You should have sorted this before you started work.

I haven't started work? The footings have been in since 2001, the plot left since then. It was built to this stage to stop the planning consent expiring, I checked with the council last week that I can go ahead. I've been unable to do anything with the land, as we've been waiting for the my girlfriend's late grandfather's will to be sorted. He's left it to his wife, who now wants to sell it.

[LeighW]

satans worm said:

Also, I'm sceptical of this good 'deal', if it was a done deal at making 40k in 4 months why wouldnt a builder buy it instead??

'Cos she's selling it to me and her grandaughter instead. She's a wealthy woman, doesn't need the money, and is helping out family, that's all. Once I can secure finance for the build, work can start immediately. I'm also getting quotes from another builder to check against.

Thanks for the pointers. I'm building this to live in btw, not sell.

Edited by LeighW on Thursday 11th June 13:05

[mrmaggit]

Peterborough Building Society do mortgages for self-builds, they're at every Self Build Show.

[mk1fan]

LeighW said:

mk1fan said:

You should have sorted this before you started work.

I haven't started work? The footings have been in since 2001, the plot left since then. It was built to this stage to stop the planning consent expiring, I checked with the council last week that I can go ahead. I've been unable to do anything with the land, as we've been waiting for the my girlfriend's late grandfather's will to be sorted. He's left it to his wife, who now wants to sell it.

Your first post reads as if you'd started work already, not that you're buying someone's unfinished project.