self build mortgage or normal mortgage?

oh_know

I intend doing a self-build and have somewhere in mind (a run-down bungalow that I would knock down or turn into a house)

I can do this by a 90% LTV "normal mortgage" and dont need the rigmarole of a self build mortgage but what are peoples thoughts on this? have i missed something, are there pro's and con's i should consider?

My father is a builder so I dont have many issues about the actual build side.

(Of course if the mortgage people say that the bungalow i am buying is un in habitable then i guess i have to go down the self build mortgage route)

any thoughts?

Mortgage_Mark_2

Would you lend someone money against a property that they were planning on knocking down, rendering it worthless?

Even a self-build mortgage, generally you need to get to 'wind and weather tight' before they will let you drawdown any funds.

Your point about the bungalow being uninhabitable is an important one for a 'normal' mortgage as if it isn't habitable (generally speaking it needs a fully functioning bathroom and kitchen) then you won't get a mortgage, full stop.

Have you looked into something like bridging finance? I think you may struggle going down the mortgage route.

oh_know

Thanks, for the reply.

I am pretty sure i will be going down the self build mortgage route now in any case as after checking i am pretty sure the place would be deemed uninhabitable

I guess i was thinking that assuming the bungalow "just about" passes as habitable then i would/could purchase the property as is via a 90% LTV normal mortgage then without telling the mortgage company knocking it down and building a new one with my own funds!

I dont need briding finance as a self build mortgage will do the trick since i believe you do get an initial drawdown - as per point 1 below.

Plan is along the lines of:
1. Buy for 270k, borrowing 50% of this initial cost(135)
kick off the build with my own funds (I will have about 50k spare at this point)
2. Build for 150k
3. borrow 80% of build cost (120k) at intervals based on the various stages and based on me working out costs/activities/timelines etc.
4. At the end what ever I havent drawed down then happy days

after 2 years the mortgage will be ported to a "normal one" which would be circa a 60% LTV one

sshaw101

oh_know, how did you get on with the self build route? is this through build loan/store?

we are in a very similar position, however the property we are buying will not be demolished just refurbed inside and to suit a layout for creating an annexe space for the father in law.

Our mortgage has advised us that a residential mortgage company would deem it uninhabitable - few leaks from the roof, damp inside (due to leaks and portion of blown render). It currently has commercial use - but converting it back to resi. it used to be resi years ago. However it does have a bathroom and kitchen - which once water and elec etc is turned back on should be fine.

Its obviously easier going down the resi mortgage route - but think we will have no choice but to go the self build route.