How To Finance Self Build - £500-600K

arc_

Hi,
Has anyone had experience of financing a self build, by knocking down existing home and re building a high value home?
Existing house value £500k, with £300k mortgage
New build cost: £500-600k
Final property value: £1,300,000
I need to understand:
If I can secure bridging finance that offers money up front without deposit, or if I can secure against equity in other property.
Any bridging company recommendations too
Thanks, C

se2020

First problem is if existing house has a 300k mortgage on it that mortgage provider is not going to let you knock it down.
Second problem is if its worth 500k and its going to cost you 600k to build a 1.3mil property that's only 200k profit on a 1.1mil investment. If you finance it on bridging you will probably loose money unless you can complete and sell the whole project within a year.

How much equity do you have available on other properties?

Thrugelmir

A non starter on the basis of the information you've provided. There's no security to fund the build. The existing mortgage will need to be repaid as well. 

arc_

I have 800k equity in other property to secure a build against. Whilst the existing mortgage provider no want me to knock the house down, the land alone is worth the same as what it would be regardless of the property being there. I have spoken to some finance companies who can take over 1st charge on the plot too, which sorts that problem out.
I do need to speak with my existing mortgage provider though because if they say no knock down, then thats a potential problem.

Anyway, if I did knock it down, and replace with new, how would they ever know I have built a new property on the land because the new one would be worth twice the amount of the old anyway, and when I remortgage post build, it would clear the current providers finance anyway

arc_

saying that, sometimes you can say to much to a company just by simply asking questions. I rang an insurance company up once to see how much my excess was as I had a pipe leak and damage my ground flooring. I never even claimed on insurance but they tried to put my policy up!

se2020

If you had the cash you could just knock down the house and put another one up and the mortgage provider would probably never know. 
The problem is if you are trying to secure a mortgage against the plot/build the solicitor will see there is already 300k secured against it that will need to be settled first.

If the build can be done for 500k then you should be able to secure 800k of finance on the equity you have in the other properties. This will let you pay off the 300k outstanding, knock the place down with no hassle and build again. 
Providing you have enough income to support 800k of debt.

billy2shots

Have you factored in demolishing and site clearing the current property?
If not then prepare for a shock. 

Thrugelmir

arc_ said:

I have 800k equity in other property to secure a build against. Whilst the existing mortgage provider no want me to knock the house down, the land alone is worth the same as what it would be regardless of the property being there. I have spoken to some finance companies who can take over 1st charge on the plot too, which sorts that problem out.
I do need to speak with my existing mortgage provider though because if they say no knock down, then thats a potential problem.

Anyway, if I did knock it down, and replace with new, how would they ever know I have built a new property on the land because the new one would be worth twice the amount of the old anyway, and when I remortgage post build, it would clear the current providers finance anyway

You'll need to budget on redeeming the existing mortgage.