£175,000 Mortgage??

Jo4

Friends of mine owns the land on which they wish to build a new house and garage. The house is a bungalow with a loft conversation and a conservatory and has a total of 2823 sq.ft / 262.12 sq.m and the garage is 950 sq.ft / 88.29 sq.m. The architect who drew the plans said to build the house and garage and leave it ready to move into would cost £175,000, btw this property is in N. Ireland.

How much would my friends need to be earning to get this mortgage and how long would they need to be in employment for? Is there any fees or charges for building a property? What would the monthly repayments be over 15 / 20 / 25 / 30 years? Any ideas would be appreciated.

Caveman_4

Jo, Friends of ours did similar just outside downpatrick but went the direct build route where IIRC you project manage the build yourself. This allowed them to come up with a 2500sq ft house and separate 2 storey garage for around £120K. The completed last summer so there maybe some inflation in materials.

Direct build should be cheaper if in the meanwhile you have somewhere to live and deadlines aren't that important.

The scary part is i believe you have to have the house upto a certain level before the banks will release mortgage monies. In our friends case they had the brick work up to about chest height throughout the house before mortgage monies were released. This cost them about 15K before they got into the mortgage. There maybe other lenders who will loan from start but IIRC the money is always released in stages and the lender will have their surveyor inspect at each stage.

Repaymenst on a mortgage of £175K would vary from £1450(15 years) to £1000(30 years).Use the many web based calculators to get a more exact answer. Most lenders want 3 months pay slips and bank statements before lending so i'd say that was a very minimum. You have to have a half decent credit report too which usually takes a year or two too build up. For a £175K mortgage you are probably looking around a joint income of at least £55K probably preferable to be closer to £70K although lenders are becoming more flexible so some will loan on an income of £55K or lower. Thats without a deposit of course!

Apart from planning and building control i am not too sure about other fees...depending on location their maybe costs associated with being connected to mains gas/water/electricity/phones.

Jo4

Caveman wrote:

Jo, Friends of ours did similar just outside downpatrick but went the direct build route where IIRC you project manage the build yourself. This allowed them to come up with a 2500sq ft house and separate 2 storey garage for around £120K. The completed last summer so there maybe some inflation in materials.

A few questions, please don't feel obliged to answer. How did they know what they were supposed to be doing each step of the way? How long did it take from start to finish? How much is their rates or how do you work the price for rates on a garage, is it the same as a house and if so how do you work out the rates on a house?

toonfish

they could finance this on a self build basis, required income depends on the lender but they will advance 95% of land costs & development costs in advance, so no need to come up with any capital. Rates aren't the greatest, but this is really a stop gap solution and once the house is complete they can remortgage to a standard product.

They are also able to stay in their current home if required, and the current mortgage is deducted as a commitment.

Another alternative is commercial development finance, but if they intend to live there the first option is the cheapest overall way.

Jo4

toonfish wrote:

they could finance this on a self build basis, required income depends on the lender but they will advance 95% of land costs & development costs in advance, so no need to come up with any capital. Rates aren't the greatest, but this is really a stop gap solution and once the house is complete they can remortgage to a standard product.

What happens about the land costs since friends already own the land which is worth £140,000? Are they in a better position to get a mortgage since they own the land and could the land act as a deposit?

toonfish

Jo4 wrote:

What happens about the land costs since friends already own the land which is worth £140,000? Are they in a better position to get a mortgage since they own the land and could the land act as a deposit?

exactly - they could borrow £133,000 straight away, plus in theory another £166,000 against the development costs so there is easily enough in the project. Obviously this would not make sense in one go, but they can draw it down in stages as the build progresses.

Jo4

toonfish wrote:

exactly - they could borrow £133,000 straight away

Could they really considering they own it and they do not owe a single penny for it?

toonfish

Jo4 wrote:

Could they really considering they own it and they do not owe a single penny for it?

yes, as long as they have the income to support the borrowing

Jo4

toonfish wrote:

yes, as long as they have the income to support the borrowing

Does that mean if the entire build cost £133,000 that they would not have to wait for the money to be released in stages and if it cost more than £133,000 that they could build until the building costs were £133,000 and then look for more money?

toonfish

Jo4 wrote:

Does that mean if the entire build cost £133,000 that they would not have to wait for the money to be released in stages and if it cost more than £133,000 that they could build until the building costs were £133,000 and then look for more money?

yes, in theory they could take the whole £175K straight away, but there is no point paying interest on the funds until they are needed. A maximum advance would be agreed, based on the costed specifications and final value of the property, and then the money would be drawn down as and when needed.

Jo4

How much do you reckon they would need to earn to get a mortgage of £175,000 or £150,000? Is there any where they could get advice about self builds rather than a contrator?