How to mortgage a self build?

SarahBeech101

Hello,
I am dreaming of building my own house but I really need some advice on how to finance it. Ideally I would like to buy a little old house on a one acre plot which I would eventually knock down and build my own house in its place. I could get a normal mortgage initially but then I would need some sort of building mortgage or loan in order to carry out the demolition and build, and I am wondering how to do that. I could be living in the little house for a couple of years whilst I try to get planning and finalise building plans, so perhaps I could remortgage 2 years later with a self build mortgage? But I know banks can be funny if there is no actual building on the land for a period of time... I'm confused and can't find the answers online! 

caprikid1

There are companies specializing in self build schemes. I think they always lend behind the build so you would need a fair bit of money upfront.
IE Lend to buy the plot assuming planning granted, lend once foundations and groundworks are in etc. It is really quite specialist and needs a good broker, there are lenders out there.

AdrianC

Can you give us a hint of the sums you're thinking of?
How much equity do you have currently? How much disposable income per month do you have?
What do you foresee the plot purchase to cost?
What do you foresee the build costs to be?

eve824

We are nearing exchange / completion on a plot of land for a self build.
Lots of people told us it couldn't be done (we are also selling our house at the same time with a small chain) as the self build finance would be hard to get. Took 5 weeks from application to offer and that also was over Xmas too.
The plot we are buying has full PP for a house. A self build mortgage lender won't lend for plots without planning permission.
The other way to do it would be to either buy a plot of land outright and try and get planning - risky IMO.
Or as you say buy a run down house demolish and rebuild, slightly risky as you still might not get PP (but less risky than a complete new build) and probably the most expensive way of doing things as you pay a premium for having a house there, then have to pay demolition costs too to get rid of it.
You would get a normal mortgage to start with then apply for a self build mortgage when you have full planning permission for the new house - the lender we went with (Ecology - highly recommend) will lend us 80% of the plot cost without triggering another valuation so seeing as we are putting just over 50% of the plot cost in as cash/equity we can draw down enough to get us started on the build before we trigger another valuation. Not all lenders work like that and some have stage inspections instead.
The lender will look at the estimated finished value of the house and want to see detailed costing breakdowns before they will approve the loan. They will also at no point lend you more than 80% of the last valued amount.