Reducing self build mortgage interest charges

GreenBee_2

We are trying to work out a budget for building a house as there seem to be quite a few plots available at the moment and they are cheaper than they were a few years ago.

The budgeting tool we have been using that we got off Amazon says that we should expect to pay around £10k for interest charges on construction work and professional fees.

But the land interest costs are nearly £45k!

We have a list of mortgage providers that do self builds, including some broker in Scotland that deals mainly with self builds, but does anyone know if we can get a mortgage company to lend just for the construction work and just for the land on a lower rate of interest?

Is there any way that we can reduce the interest costs on holding the land before construction works start? That would probably save around £10k - £20k at a guess if we could do something.

Thank you.:j

Fuzzyness

have a look on www.ebuild.co.uk/community

lots of self builders there and a section on mortgage and finance.

Conrad

GreenBee wrote: »

Is there any way that we can reduce the interest costs on holding the land before construction works start? That would probably save around £10k - £20k at a guess if we could do something.

Thank you.:j

The only way to reduce interest costs would be by remortgaging your existing main home, which would be possible if you had sufficient equity.

Otherwise you will pay interest at market rate on any sums you borrow to buy the land and do the build out.

Conrad

GreenBee wrote: »

The budgeting tool we have been using that we got off Amazon says that we should expect to pay around £10k for interest charges on construction work and professional fees.

But the land interest costs are nearly £45k!

Do you mean £45k over say 25 years? Any illustration would show the full cost of interest over the full term, but if you for example only had the land loan for 1 year the interest would be much less (but bare in mind any exit fees), if for example you built the home and then were able top remortgage to a better deal.

Self build is no walk in the park nowadays. You'll need to be in a good financial position to get accepted. Don't forget the costs of things like insurance on the building materials.

GreenBee_2

Conrad wrote: »

Do you mean £45k over say 25 years? Any illustration would show the full cost of interest over the full term, but if you for example only had the land loan for 1 year the interest would be much less (but bare in mind any exit fees), if for example you built the home and then were able top remortgage to a better deal.

:T

The budget for buying land is about £200k, so this is interest on the land over a couple of years (buying it, getting local authority stuff done, design, construction of about 12 months).

Conrad wrote: »

Self build is no walk in the park nowadays. You'll need to be in a good financial position to get accepted. Don't forget the costs of things like insurance on the building materials.

Thanks! the software we have seems to cover all the costs that we might need and gives a guide to what to budget, for everything! Can't believe MSE haven't got anything on about it.:money: Its got all 5 stars on Amazon http://www.amazon.co.uk/Sirca-Home-Developer-Build-Develop/dp/B006T32AZK/ref=sr_1_1?ie=UTF8&qid=1326317629&sr=8-1