Self Build Mortgages

gil7006

I am looking for a self build mortgage,

Build costs - 105000
land costs - 45000
Deposit - 20000
Mortgage required = 130000
Joint salary - 55000

I have around 10k on 3 credit cards. paying loan at 373 a month 30 months remaining.

Have 5 missed payments in last year on credit card and credit score is 733.

Will i get a mortgage? Any advice?

koexelek

Highly unlikely, unfortunately.

The size of deposit ( £20k) just isn't enough really. The missed credit payments will also go against you

gil7006

What size of deposit wold be required. The missed payments are over a year old next month will that make a difference?

Conrad

You'll need at least 25% deposit. Did one like this for a client recently and thier credit rating meant only bridging finance was available, but we secured a deal where no payments of interest were required for 9 months.

Whilst the build was underway we put in place a normal remortgage, which repaid the bridging finance at the 9 month point plus all outstanding interest, but due to credit history the rate was 7.5% fixed.

To get bridging finance you will need to put in about 30-40% deposit on the initial purchase of land, and further fund releases will be limited to 70% max.

Conrad

EXAMPLE

Land cost £45000. Deposit = £11250 minimum,, but could be £20,000

Initial build cost, say £30,000. Max loan available c£18000.

Total funds required from you to fund complete build, if the total build and land cost if £150,000, would be something like £50,000 plus legal fees, surveys, insurance and so on.

Your missed card payments put lenders in a difficult position, in the sense they will have to demonstrate why it is you can afford to increase payments now and pay them on time, where you could not 1 year ago.

So, in a nutshell you need a lot more cash.

gil7006

I am currently living in work related rent free property, will that make a difference with regard bridging finance. the house will be valued at 170k at end of build.

gil7006

Do you know anythin about accelerator mortgage from buildstore they are quoting up to 95% of land and build costs?

Conrad

Buildstore won't offer anything like 95% where there has been adverse credit.

The credit crunch means no lender wants to lend above 75% where there has been missed payments. Self build is specialist as it is, so with the added complication of missed payments, the absolute minimum deposit will be 25%.

Lenders are also much more wary of 'hope value' now, that is, the value expected once the place is built. Now the tendancy mis to use actual current 'as is' values to determine how much can be released at each phase.

gil7006

Thanks for your help.

Llyllyll

Hiya,

Not wanting to hijack this thread but my situation is similar in some ways to gil7006's and was hoping you could advise (as I'm not havig much luck with my own posting ).

We have a discounted mortgage deal (repayment) coming to an end in June 09. There will be £45k outstanding at that time.

Given our current availability to make overpayments I estimate we could clear that amount in less than 6 years (but term would be 8 years as we don't want to over commit).

My concern however, is that we would like to move within 2 years and I there is the possibility that mortgage interest rates would have risen by then (but who know by how much). It is also worth mentioning that there is a possibility that the new property/land will be a self build so that has to be a consideration as well.

I am now not sure whether to go for:

1. another 2 year deal and wait to see what is around when that comes to and end
2. something like a 10 year fixed (with the flexibility to continue overpaying) that I can transfer across to a new property at the time (or is this too much of a long term plan considering that we could clear that amount in less than 6 years) or
3. a 5 year fixed (transferable and with overpayment options)
4. or for something completely different?

I conservatively estimate our current property value to be £135k.

Any advice greatly appreciated.

Thanks

Conrad

Lly

If I were thinking of moving and there was a possibility the next property might not be acceptable to the lender(for example, self build), then I would take a deal that would expire prior to the move.

I might even just bump along on variable for now if my lender had a low rate.