advice needed with build to let

hollowhead

put this on a different forum, but maybe needs to be on here. please help if possible,

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my husband is a builder, we have a house worth £350000 with no mortgage. we would like to build to let. and were wondering if this was possible. he is 56 so his age and earnings (as self emloyed ) would go against a normal mortgage. we would like to buy a plot for £120,000and spend £80,000 bulding it. the monthly rental in our area is about 700 per month. but we are looking for a long term investment, can anybody tell me if it would be possible and what is the best way to do it? thanks

sbb

I would have thought you have sufficient equity in your house to obtain 200k, mortgages are available for self employed (with accounts) or even self certificating ones not requiring accounts (I'm not a mortgage expert though).

There are also companies that offer self build mortgages that provide cash in stages, i.e. on land purchase, foundations, etc Not sure the maximum %age they would offer. There are a few self build magazines availalbe that are awash with information and adverts from such lenders. You might need to find/arrange some working capital in addittion to the main loan though.

hollowhead

thanks sbb, but i dont really want to remortgage my house. i would like the mortgage to be on a buy to let basis but we build the house to let. does this make sense? building it ourselves would make the house worth more than we borrowed as soon as it was built so we would have some equity in the house.all we would need is the rent to pay the mortgage until we retired.

JulieHK

You would be able to get finance for approx 75% of the land and 100% of the build costs. This would normally be over a short term i.e. up to 1 year. You could then remortgage only a BTL mortgage once the property is completed and ready to rent. Your husbands age is not a major problem as BTL are self financing. Contact a fees free broker to get details. The monthly costs would be about 1.5% of the loan (depending on the lender) and the development costs would be released in stage payments.

hollowhead

thanks juliehk. is there any way we can get around paying the 25% out of our own savings? would we be better off remortgaging the house? the problem is our books aren't good (who's are?) as my husband had a heart attack last year(back to good health now.)

toonfish

You could get a 95% mortgage (land and build costs) on the basis that you are building a house to live in, then change your mind once it is completed and remortgage to a buy to let product.

hollowhead

but we would not get a motgage on his books. a self certified mortgage costs a lot more doesn't it? what do you need for that type of mortgage? sorry if i appear stupid but i really want to do this the best way. thanks, all advise is a help

toonfish

you can self certify as a short term solution - it will be more expensive for the time it takes to complete the build but is just a means to an end really.