Self build mortgage, best thing to do?

davey_browning

We're looking to do a self build and I'm just thinking ahead about finance to if/when we find a plot that is suitable to build on. We currently have a house that would be worth between £220K - £240K and the mortgage is paid off on it. Would we be able to raise this sort of money against our house to put into the new build? We also have a bit of cash to put down as a deposit.

Just looking for thoughts and/or experiences from folks.

Thanks

Dave

koexelek

I would say raise the money against your current house, them you can do the self build at your leisure.

Self build mortgages tend to be expensive, and come with a list of terms and conditions as long as your arm.

Beware of early repayment charges if it is your intetion to sell your current property and move i nto the new onw when it is finished though.

swanny65

I would disagree somewhat with what koexelek has posted. We self built 7 years ago. We used the Norwich and Peterborough Building Society to get our mortgage.

They offered us the maximum allowed which was heaps more than we need. They also offered the same rate as other new customers were offered, we took a 5.79 fixed rate. Each instalment was repayable at the fixed rate even though we didn't take the final instalment until 12 months after we started the project.

Things might be different in the current financial climate, we had a 25% deposit for our build. I would read the self build magazines and look at who currently are the recommended best lenders.

I agree that the list of conditions can be long winded. We paid a bit extra and went to the partner of one of the best local solicitors, ignore legal executives, for the legal work and that made the land purchase and mortgage agreement relatively straightforward. If the land purchase is done correctly the lender has little to query.

Finally get a local surveyor to sign off each stage.

koexelek

swanny65 wrote: »

I would disagree somewhat with what koexelek has posted. We self built 7 years ago.

That was 7 years ago, when lenders wanted to lend money :cool:

To be fair, Norwich & Peterborough have always been market leaders in the self build sector though... and have always been my first choice

feisty1

koexelek wrote: »

Self build mortgages tend to be expensive, and come with a list of terms and conditions as long as your arm. Beware of early repayment charges if it is your intetion to sell your current property and move i nto the new on when it is finished though.

I disagree with s/build mortgages being more expensive, the most well know s/build provider has high rates at the moment & declines are many. However quite a few of the main providers offer these.......I am thinking of one recently arranged 5yr fixed 4.89%, with this particular lender you choose from the purchase rates depending on yr LTV. Normal criteria for s/build applies, staged payments etc............

davey_browning

feisty1 wrote: »

I disagree with s/build mortgages being more expensive, the most well know s/build provider has high rates at the moment & declines are many. However quite a few of the main providers offer these.......I am thinking of one recently arranged 5yr fixed 4.89%, with this particular lender you choose from the purchase rates depending on yr LTV. Normal criteria for s/build applies, staged payments etc............

Who was the lender that did the 5 year at 4.89%?

D

davey_browning

Seems like www.ecology.co.uk do quite good rates, they lend if you are doing a conversion or renovation which might something we would do. Anyone used them or got any thoughts on them?

feisty1

I have just cheked the site......it really depends on your understanding of mortgages........they don't offer advice, it is information only, which means if you took a mortgage & at a later date felt it wasn't suitable for yr needs, you have no come back, as they supplied the information & you made the choice........non-advice

davey_browning

Fair enough. Sounds like most things in life, you look into it, think about it and then pays (borrows) your money and takes your choice.

davey_browning

Spoke to Build Store who have gone away and looked into mortgages for me and we have a bit of a strange one here. I am employed as a teacher so that is fine but my wife is a locum GP and so they class her as self employed. Apparently lenders now need 2 years of accounts if your are self employed and since she was in a GP training scheme (still working and sitting professional exams etc.) until last August she doesn't have 2 years accounts and they won't take her current accounts and pay slips from last year! So basically we can't get a mortgage!

Seems mad since we already have a house and are basically just borrowing against that, there really is no risk for a bank... Anyone got any thoughts?

Dave

feisty1

Build Store isn't yr only option.......speak to an indepedent advisor, make sure they're upto date on knowledge (build store use BM Solutions) so if you tell the adviser u have tried build store & they're a no go & the adviser offers you BM ..........u will then know the advisor doesn't know very much either!