Self-Build Mortgage MADNESS

madmama81

We are in the final stages of our mortgage application. We have missed both dates of completion due to the mortgage lender. Just when we think all is okay, they spring another surprise on us! The latest is that we are under-insured. The value of the house (uninhabitable) is £75k. The estimated completion value is £400k and £350k for the outbuildings. They are not willing to release the funds until we have the following: Buildings insurance to the value of £750k, as well as Public Liability of £5 million and Employers Liability of £10 million. We are unable to do any work to the house for at least a year as we have been advised to let it "dry out", hence having to pay for the insurance upfront seems ludicrous as not only will it not be needed but unless works starts within 90 days of the insurance start date, it is no longer valid.
I really feel that we are being unfairly treated and expected to spend money on something that is entirely unnecessary. Our negotiations have to be handled carefully as we are worried that they will retract their offer and as we have tried three other lenders, we have no more chances left!!! Help!

Dave_Ham

Hi there,

Whilst I sympathise I think you already know the answer here. Its their money and they can request whatever they want ultimately in order to let you have it...

Would maybe go down the avenue of trying to get the most competitive quotes you can giving the details and having as big an excess on the insurance as you can, if you are personally not worried about the insurance issue.

Good luck...

madmama81

I agree with you completely. It is their money but surely they should have told us about this from the start? They have left this to the last minute, once again. I can understand their concerns and we will get the insurance but it just seems to be unreasonable. I do sometimes wonder if they are doing this to make us walk away!!! They might not want to lend the money but have to go through the motions so as to be seen to be helping first-time buyers etc. Perhaps they have a government quota to fulfil and this is how they do it!!!

kingstreet

Self-build is such a specialist area, I wasn't going to post in this thread. I hope I'm not dishing up egg-sucking lessons, but have you used the BuildStore site for your build?

http://www.buildstore.co.uk/finance/buildcare.html

The page I've linked is the insurance product.

Hope it's helpful.

madmama81

Ha ha yes we have!!!! I feel that had we been given a list of every requirement from each lender, this process would have been a lot easier. We have wasted so much time because we have had to wait for feedback from the lender on everything. I am seriously thinking of writing to the FSA now the latest requirements are just laughable. But will it mean we lose our offer?

kingstreet

I know many of the old lenders are out of the self-build and renovation markets and yes, rocking the boat could see them take their ball home...

As I say, I know little about self-build, so can only refer you to the place I would go for help. They seem to think the cover should be in place from the point you buy the plot. Is that not normal?

madmama81

We have had buildings insurance and public liability insurance from the beginning. The standard is £2 million but they want £5million. The insurers think this is excessive. Not only for them but for us as the premiums would be astronimical. It seems as if they are trying to push us into a corner. Our next step is to engage with management. And then the FSA.