Buying a house then building a new one in the Garden

eddddy

BV88 said:

They were well aware of the development possibility, it was even listed in the description both on extending or new build, with the obvious caveats that it is subject to PP. 

OK - that makes more sense. From your original post I thought you were suggesting that you'd spotted an opportunity that everyone else had missed.


I guess a few random things to consider...


Take a look at recent similar full planning applications in the same street - to see what docs have to be submitted as part of the planning application. There might be a big pile of plans, surveys and reports. It might cost you £10k to £20k in fees to get them all prepared - and then you might be refused consent.


You were bidding against developers/builders who probably have access to cheap labour and cheap professional advice. Also they will be bidding on the basis of squeezing as much value out of the plot as possible, whereas you probably won't want to do that. So you might find that you're not actually making any money out of doing this - maybe even making a loss.


As you probably realise, you won't be able to finance the build with a regular mortgage. There's the option of 'Development Finance' but that's expensive - and you'll be grilled about your business plan etc. You'll probably be asked about your track record in property development etc, and they might not take you seriously if you have no track record.

[Deleted User]

BV88 said:

Lover_of_Lycra said:

BV88 said:

Good morning,

Myself and my wife are in the process of buying a bungalow originally with the intention to undertake a large extension. The property has the possibility to section-off a separate driveway with street access and a plot that would still be a rather generous 8,000 square feet for a new house to be built. There is no current planning however the neighbours to the rear and five doors across have both built into the rear gardens and the new house would not be within about 20 meters of any other properties besides the existing bungalow. If we did not get planning we would revert to our original idea so it would not be the end of the world if it did not work out.

We are considering building a new house on the site which we will then move into, keeping the existing bungalow for rental income. I was hoping for some advice from this forum about timings and financing. My current plan is to put down the largest possible deposit we can using our savings (about 50%) then aggressively pay down the remaining mortgage which I should be able to do in about 3 years, we are paying 475,000 for the bungalow. Once the mortgage is paid off entirely we will then spilt the deeds, remortgage on the existing bungalow with the new smaller plot and use the cash to build the new house, where we will have a budget of 350,000 for the build. Once the new house is built and we can move in we would get a mortgage on the new property to clear the financing on the bungalow.

I have the following questions:

- Does the above plan seem reasonable/achievable and would you foresee any major pitfalls?
- Does anyone have an idea of how I can expedite the new build? For example would the mortgage company allow me split the deeds when I reach a certain LTV then remortgage, then take out a second self-build mortgage for example.

We are happy to take it slow and clear the current mortgage if necessary however we want the new home to enjoy with our young family and would regret missing out on 2 or 3 years at this stage in our lives. Assuming in the above plan it will take us 4.5 years (3 years to pay off the mortgage and 1.5 for the build), I am looking for a way if possible to get that to around 2.5 years (1 year for planning/saving and 1.5 for the build). For what it is worth we are not anywhere near our budget on the existing property, we could lend up to 900,000 for a residential mortgage according to the bank (however we have no intention of going anywhere near that number which I think is insane!). Our joint, after tax net income is currently about 12,000 per month, however that is likely to reduce to about 8,000 - 10,000 per month in 3 to 5 years.

It is not an option for us to find another property as this location is very close to existing family in a fairly rural location where suitable property coming to market is incredibly rare. 

Many thanks 

Instead of a ‘normal’ mortgage and trying to pay it down fast have you looked at getting some kind of development finance to allow you to build the new house straight away? 

No I have not looked into that, do you have any suggestions of where to begin a search for such an option?

Thanks

Maybe you’ll get an answer on the Mortgages and Endowments board where a few mortgages brokers post. 

seradane

eddddy said:

BV88 said:

They were well aware of the development possibility, it was even listed in the description both on extending or new build, with the obvious caveats that it is subject to PP. 

OK - that makes more sense. From your original post I thought you were suggesting that you'd spotted an opportunity that everyone else had missed.


I guess a few random things to consider...


Take a look at recent similar full planning applications in the same street - to see what docs have to be submitted as part of the planning application. There might be a big pile of plans, surveys and reports. It might cost you £10k to £20k in fees to get them all prepared - and then you might be refused consent.


You were bidding against developers/builders who probably have access to cheap labour and cheap professional advice. Also they will be bidding on the basis of squeezing as much value out of the plot as possible, whereas you probably won't want to do that. So you might find that you're not actually making any money out of doing this - maybe even making a loss.


As you probably realise, you won't be able to finance the build with a regular mortgage. There's the option of 'Development Finance' but that's expensive - and you'll be grilled about your business plan etc. You'll probably be asked about your track record in property development etc, and they might not take you seriously if you have no track record.

Why development finance? There are mortgages for self builders:

https://www.moneyexpert.com/mortgages/self-build-mortgages/

MovingForwards

@Doozergirl can possibly go over the practical side of your idea.

Slithery

seradane said:
Why development finance? There are mortgages for self builders:

https://www.moneyexpert.com/mortgages/self-build-mortgages/

That is development finance....