Cost of a £150k bank loan for 1 year

collectors

Hi, i am trying to find out what the cost of a £150k bank loan for 1 year might be. I seem to be getting many conflicting answers. It will be to do with buying land & building.

amnblog

If I understand you correctly (self build) this allow for around £12,500

getmore4less

Depends on the interest rate and if you make any payments.

Amounts * % (%means divide by 100)

eg for 5% :£150,000 * 5 /100 = £7,500 interest only.

if you need to make payments on a monthly basis based on say a 20y full term cost per month at 5% for the year will be £990pm = £11,880 but you will have paid of around £4,400

Thrugelmir

collectors wrote: »

It will be to do with buying land & building.

What's the nature of the land and buildings?

collectors

Hi, thanks for posting. I have some land with planning for 1 house. To help the builder that would purchase the plot, i would let him build the house & when the house is sold, he would give me £150k for the plot with planning plus a percentage of the final sale price of around £500k. The percentage maybe around 1.5 or 2%. This will make it easier for him to raise the building cost & i would make an extra £7.5 to £10k on the deal.
This is why i am looking at the possible costs of a £150k loan as this would be his saving.

boo_star

collectors wrote: »

Hi, thanks for posting. I have some land with planning for 1 house. To help the builder that would purchase the plot, i would let him build the house & when the house is sold, he would give me £150k for the plot with planning plus a percentage of the final sale price of around £500k. The percentage maybe around 1.5 or 2%. This will make it easier for him to raise the building cost & i would make an extra £7.5 to £10k on the deal.
This is why i am looking at the possible costs of a £150k loan as this would be his saving.

Realistically you won’t get a personal loan from a bank for that amount and the people who do offer such large amounts to individuals will charge an eye-watering rate of interest that will dwarf the “profit” you’re offered. There’s remortgaging to release equity but I can’t see anyone who offers such a loan for one year and even then, it’ll likely end up with you breaking even at best.

I’m not sure why you’re getting involved in this. Why are you taking on all the responsibility for the debt incurred, especially for such a small cut?

It does sound to me like you’re being stitched up here.

getmore4less

I am seeing it's to save the builder raising the £150k no one will be borrowing real money the builder is borrowing the land.

Whats getting built and whats the build costs going to be?

That will give you an idea of the % of capital invested is yours.

Keep ownership of the land.

If the builder goes bust you could lose the lot if you hand over the land.

Thrugelmir

collectors wrote: »

This will make it easier for him to raise the building cost

Difficult to see a builder raising the finance of the construction of property on a piece of land they don't own. There's zero security for the bank.

collectors

What we are coming up against is the builder can raise £200k against his own property, but this will only pay for the build cost & not the rest needed. So, i was just looking at another way around the problem to offset the land purchase for 1 year & make a little extra on the deal for doing this.
Naturally the land/plot will stay in my name just encase anything should happen to the builder.
The maximum total outlay i will have had on this will be around £9k

getmore4less

You are putting in £150k
Builder is putting in £200k + borrowing costs

Will they be taking a wage from that £200k or is that just their costs of materials and bought labour?

Lets estimate 0-£50k for borrowing and a wage.

that means total costs are £350-£400k your % of that is 43%->37.5%

On £500k sale that's £220k->£187k. less your £150k gives you £70k->£37k


2%(£10k) looks on the light(mean) side as that will cover the value of money but by not a lot.

A quick google suggest commercial borrowing at 70% LTV could be in the 0.5%-2% pm, £9k-£36k

Why not turn the proposal round and you employ the builder to build the house and they only get paid(well) when it sells.

You doing this a self build project should be a lot cheaper than the commercial borrowing for the £150k, and could fund in stages.


there is a lot more to think about, like project overruns, needs more finance to finish, the estimated selling price becomes optimistic(loss) etc.

molerat

He is not a house builder, he is an amateur developer who happens to be a builder. A proper house builder should be able to buy the land and raise the funds. He is taking you for a mug. If it all goes wrong you will be left to clear up the debt mess.