Self Build Mortgage Help

moneysavingrock

Hi, we are looking to self build our own house but trying to understand how we can fund it.

I know with self build mortgages are paid in tranches and the maximum LTV seems to be around 80%. But is this 80% of the final valuation of the property or 80% of the cost of land+cost of build?

If it's the former we can probably afford it but if it's the latter then we are snookered!

Any tips or advice from those with experience if this would be much appreciated.

P.S We're in Scotland if thats makes any difference

ACG

I was having a chat with a rep at one of the lenders that do self builds just last week, we only really breezed over it but my understanding is that they would give you upto xx% of the land value in order for you to do the footings, once the footings are in place, they will then go upto that same percentage of the land as it stands at that point for you to build say the ground floor, then the same again for the upper floor/roof and then same again for fitting it out.

The xx% is based on the value as it stands at that point in time.

Thats my understanding, but this is something i have never really done so woould have to do some ringing around if a client came to ask me.

Let_Us_See

Latter........you're snookered!

Jimbo1976

This is from the website of Buildstore which is a large company which operates in the self build market. It does have its own mortgage broker.

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

Crashandburn

Snookered!

Best chat with Buildstore just to confirm this but needing a whole heap of cash to start these projects rather than where we were in 2007.

moneysavingrock

ACG wrote: »

I was having a chat with a rep at one of the lenders that do self builds just last week, we only really breezed over it but my understanding is that they would give you upto xx% of the land value in order for you to do the footings, once the footings are in place, they will then go upto that same percentage of the land as it stands at that point for you to build say the ground floor, then the same again for the upper floor/roof and then same again for fitting it out.

The xx% is based on the value as it stands at that point in time.

Thats my understanding, but this is something i have never really done so woould have to do some ringing around if a client came to ask me.

Looking like we could be snookered here.

So going on the above we would need deposit of xx% for the land then same again for the % age of the next stage. As opposed to xx% of the complete project at the outset? This may be more manageable as we will have savings accumulating during the project as we are renting from family at the minute.

moneysavingrock

Let_Us_See wrote: »

Latter........you're snookered!

Been thinking more about this. Why would it be the latter if they are only lending you the money to have the work done not the market value of the property to buy it ? Have you had experience of this Let Us See?

kingstreet

From that BuildStore link;-

However, at BuildStore we recognise that not every self builder has access to the cash required to pay the deposit on the land and the first build stages so we have created an alternative – the Accelerator mortgage. Here money is released for each stage of the build at the beginning rather than the end of the stage giving you the cash you need to buy materials and pay your builder. It also lends a generous percentage of the costs - up to 90% of the cost of the land and up to 90% of the cost of the build.

Accelerator is ideal for many situations, for example if you have only a small amount of cash available and don’t want to sell your existing house to release equity before your new one is complete or if you want to keep the cash you have available until later in the project to maintain a good contingency fund.

Let_Us_See

Yes. If I hadn't I wouldn't have replied.

moneysavingrock

Let_Us_See wrote: »

Yes. If I hadn't I wouldn't have replied.

Thought you would.

Just putting my thoughts out there though. It is a discussion forum after all.

moneysavingrock

kingstreet wrote: »

From that BuildStore link;-

Cheers Kingstreet. I didn't follow link originally published as I'd been on buildstore already. Hadn't seen that bit though...... information overload at the moment