Self Build Mortgages

barnishroader

Hi,

I have obtained full planning permission for a site and brought the dwelling to sub floor level.
I now need a mortgage to complete the house and wondered who offer staged mortgages to Northern Ireland customers.

I currently have another property which my family and I are living in and would prefer to keep it and rent it out although if needs must i would sell it.
My intention would to either build a large double garage which would be made liveable while the build is ongoing or buy a mobile home.

Would any self build mortgage be based on the new site alone therefore allowing me to borrow just against it rather than my current home?
I understand that they would look at affordability to repay but I think we'd be ok as long as they didn't base the lending against our current mortgage as the LTV on it is approx 78% so there isn't much scope for additional borrowing.

I would estimate that the site alone is worth £60,000 (it was valued at £98,000 3 years ago!) and the cost to build would be approx £140,000 for the 2,200 sq ft new build.
I would say the value of the completed house would be £250,000 so would I be able to borrow against that?

Any help much appreciated.

barnishroader

Have i posted in the wrong thread?
I had put this in the Northern Ireland thread first but was concerned that it may not get the same response as it would on the main board but i might be wrong.

kingstreet

Buildstore?

Not sure if they operate in NI, TBH.

http://www.buildstore.co.uk/

saverbuyer

It's highly unlikely they will value the N.I site at anywhere near that. I know people who have built recently, end result has been the banks will value it at build cost (if you are lucky) but usually lower. I would start saving a 25% deposit if I were you. There really aren't that many sites selling for that sort of money now.

marathonic

saverbuyer wrote: »

It's highly unlikely they will value the N.I site at anywhere near that. I know people who have built recently, end result has been the banks will value it at build cost (if you are lucky) but usually lower. I would start saving a 25% deposit if I were you. There really aren't that many sites selling for that sort of money now.

Here's a site I viewed recently in Northern Ireland: http://www.propertypal.com/23-25-windmill-view-mullenan-derry/206336

It was on the market for £160,000 in 2008 dropping to £100,000 in 2010. I offered £60,000 for it at the beginning of last year (refused).

It dropped to £40,000 a couple of months ago and is now sale agreed. That's a 75% drop from the 2008 price.

I'd estimate the build cost at £100,000 so, after paying £40,000 for the site, your total cost would be £140,000. In looking at the local market, build costs are more expensive than what you can buy a house built in the early 2000's at the moment. For that reason, I've now had an offer accepted and mortgage approved for an 1800 square foot house at £125,000. It's also got better views and was only build in 2006.

I'd estimate that it'd take very close to the £125,000 to build the house I'm purchasing so I wouldn't build now unless I had the site for free. You already have the site but the above information is just to highlight the fact that it's unlikely that the bank will value a house with a £140,000 build cost at £250,000.

marathonic

Just to add, there's another site I looked at that has been on the market for £160,000 for over 2.5 years. The price hasn't changed but it's obviously worth a lot less than that. The cheapest house in that area (highly desirable area) is currently £310,000. Assuming you could buy that house for £270,000 and it's a 2500 square foot house with a top-end finish, I'd estimate the build cost at £200,000. For that reason, if I had the money, I'd see £80,000 as reasonable value for that site.

Therefore, it all depends on the location of the site. Have a look on PropertyPal for houses of similar quality to your intended build in the same area, deduct your estimated build cost (add a 10% contingency to these) and use that as the value for your site. In some areas, you'll actually find that this could be a negative number.

barnishroader

kingstreet wrote: »

Buildstore?

Not sure if they operate in NI, TBH.

http://www.buildstore.co.uk/

I contacted them and an advisor is calling me in the morning to discuss the application in more detail.
They said the fact that i already have the site and the work done to date will weigh heavily in my favour so fingers crossed!

barnishroader

I maybe should have added, i'm a quantity surveyor for a building contractor so i know how much it will cost to build the house i'm building.
There are 2 sites less than a mile, as the crow flies, on propertynews that are priced at £69,000 and £85,000.
My site is larger and more secluded than those 2 so i would say that £60,000 is an estimate on the safe side.
The house is this link http://www.propertynews.com/Property/Randalstown/PNC604455/93a-Church-Road/212109384/Page1is similar to what i am proposing to build so i would feel the price estimate i put is accurate enough.

Conrad

saverbuyer wrote: »

It's highly unlikely they will value the N.I site at anywhere near that. I know people who have built recently, end result has been the banks will value it at build cost (if you are lucky) but usually lower. I would start saving a 25% deposit if I were you. There really aren't that many sites selling for that sort of money now.

I agree with this. The Irish landmass features 95% less lending than pre the crash number and there are hundreds of thousands of vacant properties as supply hugely outstrips demand. Many builders are doing 'buy 1 get one free'.

The risk to a lender is that if your project failed (many do, despite the owners building experience and what not - people die / end up in a coma for example) is that the Bank would not likely be able to sell it on, given the huge supply of other lots available.

I don't know your sepcific area OP, but to me it seems a long shot that any lender would be able to help. As I say I'm no expert on NI, and happy to be proven wrong.

barnishroader

UPDATE:
I contacted Build Store and they have come back to me with an offer from Birmingham Midshires.
Personally, i've never heard of them but maybe some of you have?
Asa first offer, i won't obviously jump right in but i think i'll take the quote to Progressive, Bank of Ireland and Ulster Bank who i believe all offer self build mortgages in Northern Ireland.
Build Store also said Leeds BS made an offer but their rates were much higher so he disregarded it.

kingstreet

BMS is part of the Halifax group. It's what's left of the old Birmingham Midshires Building Society which was taken over by HBOS back in the 1990s IIRC.

Best known for old self-cert and BTL stuff.