Borrowing to complete a new build - How to do it?

wadbanage

Hi I am in the process of building a new house, most of it has been paid for but I may need to borrow some to finish it. The house should be finisihed in about 2 months.

Ideally I want to borrow on interest only terms and with no early repayment penalties.

I tried my bank (FD) and they said get lost we don't lend on those terms, even though they did when I had my main mortgage, (now repaid.) with them.

I have tried a couple of other lenders and they are not interested, even though I have good history and credit rating and lots of equity in existing house and the new build.

There seem to be 2 options, either borrow against the new house or borrow against existing house. However lenders don't seem keen on either. I am looking for about 20% of the cost of the new build or about 60% of the value of existing house.

Can anyone recommend a way forward and what I should be looking for? especially anyone who has done something similar.

getmore4less

Sell the current house.
BTL the cuurent house

mandooz

When I did self build the only lenders who had the flexibility that I needed were Nationwide building society - they were fantastic. They are a little more 'bank like' nowadays so may not be so accommodating but probably worth a try.

wadbanage

mandooz wrote: »

When I did self build the only lenders who had the flexibility that I needed were Nationwide building society - they were fantastic. They are a little more 'bank like' nowadays so may not be so accommodating but probably worth a try.

Thansk for that I will give them a call, I have been with them for a few years so worth a try, I looked at their website before and it didnt seem very promising....

wadbanage

getmore4less wrote: »

Sell the current house.
BTL the cuurent house

Um thats given me a thought, I had not thought about BTL, but my plan is to let the existing house in a few months if possible.

Any thoughts on how I can get a BTL deal on a house I already own?

kingstreet

wadbanage wrote: »

Any thoughts on how I can get a BTL deal on a house I already own?

Yes. You remortgage onto a BTL product and pay off your existing mortgage in the process. You'll need the rent to exceed the mortgage interest payment (at 5%pa) by 25% to make it work.

ie £96,000 x 5% = £400 pm interest x 125% = £500 pm rent.

You need to read up on the responsibilities of being a landlord, although this can come later when you are actively seeking a tenant.

You're likely to find the fees for a BTL are higher than you expect and you won't get a product without early redemption penalties, so plan for that for a couple of years.

wadbanage

kingstreet wrote: »

Yes. You remortgage onto a BTL product and pay off your existing mortgage in the process. You'll need the rent to exceed the mortgage interest payment (at 5%pa) by 25% to make it work.

ie £96,000 x 5% = £400 pm interest x 125% = £500 pm rent.

You need to read up on the responsibilities of being a landlord, although this can come later when you are actively seeking a tenant.

You're likely to find the fees for a BTL are higher than you expect and you won't get a product without early redemption penalties, so plan for that for a couple of years.

I dont actually have a mortgage at all at the moment? does that complicate things. Any links or contacts I can speak to?

Thanks

kingstreet

Find a whole market broker where you live. Take recommendations from friends and relatives.