Paying back Personal Loan with new mortgage

KaesarSosei

Hi,

I am in a situation where I probably need to borrow some money to commence work on a self build. Lets say £15000 for the sake of argument. At this stage I am planning to do this with a Personal Loan and hopefully find one with both a decent APR and also minimal early repayment charges since I would plan to pay it all back in 2 months max.

The thing is, I want to be able to get as big a mortgage as possible for the rest of the build, and also pay the loan off straight away with it. How feasible is this situation? ie how much will it affect what we can borrow on the mortgage, or can it be explained to a mortgage company what is happening?

Our credit rating is good, but we already have another mortgage (planning to switch to BTL later) so things are tight affordability wise. Total Build cost is £150000 and our estimated affordability taking into account the other mortgage is also £150000.

VIGILANT22

Self build mortgages vary.

Do you already own the land?....

Self builds payout in staged payments...each time they send their surveyor out to check the necessary work has been completed before releasing funds for the next stage

To gain any type of mortage your affordability will be assessed to ensure you can service existing loans mortgages etc

KaesarSosei

How do credit cards affect the mortgage lenders' thinking? We currently have only 1 card which we lightly use and pay off in full every month and with a £3000 limit. If we applied for more would that affect a mortgage lenders decision, even before spending on it?

VIGILANT22

Well that would be adding another search to your credit file....lenders are not daft, they would probably work out you're increasing your limit for future borrowing...Cash withdrawals from credit cards now appear on credit reports

Thrugelmir

Do you own the land outright?

KaesarSosei

Yes we own the land outright but that has left us with little money left to start work.

KaesarSosei

Sorry to bump this after a week, but does anyone know if a lender will give us a personal loan and then allow us to basically switch that into a mortgage from them later?

VIGILANT22

Get someone to recommend a whole of market mortgage advisor and discuss Accelerator Self Build Mortgage's with them............

Thrugelmir

A 100% mortgage for the self build is extremely unlikely.

Have you considered selling your existing property and releasing the equity to help fund the project?

Here's a link for some currently available products.

http://www.buildstore.co.uk/finance/mortgages/tracker.html