remortgage owned outright home to fund self build

rd350lc_2

Could anybody please advise if this is possible .
We currently own outright a 300k house and have about 60k in savings . No debts of any kind between my wife and I . We have found a nice plot with a near derelict bungalow on it for sale for 200k but has not yet got planning permission. Is there any way we could secure a mortgage against our current property for 200k to cover the land and bungalow cost then secure a further mortgage to cover the build for 140k plus our savings further down the line , then sell our house to clear most of the remaining debt on the mortgages , thus meaning we could stay in our home until the new build was finished ? our current salaries total 40k , so might this be a problem ? thanks in advance

amnblog

You are not likely to raise £200,000 on £40,000 income although technically you could re-mortgage the current property at some level to buy the other property.


A plot without planning permission is of no value if you are trying to raise a self build mortgage against it.


If you are serious about this idea you should invest in paying a good broker for some advice on how it can be done and within what lending limits.


Don't forget the extra 3% stamp duty on the purchase!

rtho782

£200k is a very expensive empty plot with no planning permission.

AnotherJoe

rtho782 wrote: »

£200k is a very expensive empty plot with no planning permission.

Well as it has a bungalow on it, whatever the state, that could be refurbished size as is or rebuilt within allowed development limits, so it does effectively have PP, but just not for a demolition and building of say a six bedroom three storey house or whatever OP wishes to build.

rd350lc_2

thanks all for the replies so far , we are intending building a 3-4 bed dormer bungalow , the plot is in a private road and 1/4 an acre in size and backs onto one of the nicest parks in our county , still sound expensive ?

Thrugelmir

Sell your existing property and live in a caravan while undertaking the project. You are going to struggle to borrow £340k on your household income.

minimike2

Raising a mortgage on a current home to finance a self build followed by the sale of the property to repay the mortgage..... This is bridging finance....

Mortgage lenders typically have a minimum 5 year term and don't like this kind of proposition - It will need the help of a broker if you do it, however have you considered the risk you are putting your home at - What if the build fails? You could end up with a derelict building, or a half built building, plus a large debt on your main residence.

All this on a £40k income - Regardless of if it CAN be done or not, I think the question should be more of SHOULD you do it.

rd350lc_2

Thanks Mike , yes fully aware of the consequences , but have total faith in the builders we would use and would wonder what reasons most builds fail for ? We have always been really " safe" type of people and have never took a risk on anything in our lives and come to the conclusion you don't really get anywhere in life by not taking a risk at some time . If worst comes to the worst I'd finish the build myself .

Annisele

Are you intending to buy the plot before or after you get planning permission?

If before, there's a huge risk that you'll never get the permission. If after, the current owners might want a fair bit more than the £200k they're currently asking.

As to finishing the build yourself...don't undersestimate how tough that can be. Even assuming you already have all the skills you'll need, trying to find time to build your house between earning money to pay the mortgage doesn't sound fun.

Thrugelmir

rd350lc wrote: »

and would wonder what reasons most builds fail for ?

What lenders are concerned with is the value of an unfinished project. Not why.

rd350lc_2

Annisele wrote: »

Are you intending to buy the plot before or after you get planning permission?

If before, there's a huge risk that you'll never get the permission. If after, the current owners might want a fair bit more than the £200k they're currently asking.

As to finishing the build yourself...don't undersestimate how tough that can be. Even assuming you already have all the skills you'll need, trying to find time to build your house between earning money to pay the mortgage doesn't sound fun.

I think there is no risk whatsoever of it not getting planning permission as there is a bungalow directly opposite that has been demolished in the last few weeks and permission granted to rebuild . As there has been a dwelling on the plot since 1930 odd and surrounded by other rebuilt / revamped bungalows why would it get refused ? anyhow somebody else agreed with me and within 2 weeks it is sold stc. Looks like our loss.