What happens if we get a self-build mortgage but decide not to go ahead with building/construction?

hsmith96

I was wondering if anyone knows what is likely to happen if we get a self-build mortgage but then decide (for whatever reason) not to go ahead with the building/construction (but keep the land as it the self-build mortgage would cover 65% to 75% of the land purchase)? I know the lender would release the funds for the land purchase first and then in stages until the building/construction process is finished. But if we don't want to go ahead with the building/construction and we've already purchased the land (with money from the self-build loan), what will happen? Will we be able to speak with the lender and continue to repay just the amount for the land purchase (over, say, 10 years)?

theartfullodger

Weirdly I can't read the terms & conditions for YOUR mortgage on THAT deal: Can you, perhaps the answer might be on there somewhere...

But I strongly suspect you will have breached the contract & would need to return the funds, (or be repossessed, go onto the "Hunter system" that flags up people who breach conditions, then find any further mortgage or credit deal difficult/impossible/v expensive.) .

What conditions would you impose if you were the lender, please?

hsmith96

Ahh right! Thanks for the reply -- it's just that we've found out something about the land from a previous owner and apparently there is an issue with the elevation that the architects/planners didn't pick up on. I'll have to take this with them I guess, but it's going to make things a lot more expensive now as we'll need to level the ground further + contingency fund is only around 20%. I was hoping we could just sell the land and find somewhere else to build our home.

user1977

hsmith96 said:

I was hoping we could just sell the land and find somewhere else to build our home.

That's quite a different question from what you suggested in your OP? Of course you can sell the property whenever you want - all the lender will need is the balance due to them repaid from the proceeds.

RAS

Have you been back to the architect/planners and discussed this new issue with them?

As it stands you appear to have bought land suitable for building on? And you now have a piece of land less suitable for building on?  Which may well have a lower value.

So it would be worth trying to sort out the issue.

GDB2222

Has the op actually bought yet?

canaldumidi

GDB2222 said:

Has the op actually bought yet?

Unclear bu it sounds like it. Otherwise surely OP would simply be walking away......

hsmith96

user1977 said:

hsmith96 said:

I was hoping we could just sell the land and find somewhere else to build our home.

That's quite a different question from what you suggested in your OP? Of course you can sell the property whenever you want - all the lender will need is the balance due to them repaid from the proceeds.

I was looking for options really and this (not going ahead with the actual construction/building but repaying the part of the mortgage for the land purchase over the agreed duration of the self-build mortgage) seemed like an option. At any rate, it seemed like a simpler option than having to level the ground further (and paying A TON of £££) and then going ahead with the building/construction and selling the new property afterwards. 

I'm in my mid-twenties and my husband is in his thirties, it's the first time we've bought land to build on and we're not exactly experienced or knowledgeable, and most info I was able to find on Google didn't talk about this (for obvious reasons). I thought I'd ask here if this was an option. Sorry for any confusion.

I'm waiting for the planner to get back to me as I've raised this issue with him last week and he said he'd look into it etc. No apologies either for something that was obvious (as I'm told by the previous owner). The architect was actually recommended to us by the planner and we thought it'd be better to go with him -- bad mistake. 

We'll see what we can do to sort this out, hopefully without having to fork out a lot of money. I should have thought this through better before posting on here, it seemed like an obvious thing for the lender to do but...

If I remember correctly we've put some sort of insurance in place before we started the process, I wonder if that'll help?

Thank you everyone. 

user1977

hsmith96 said:

user1977 said:

hsmith96 said:

I was hoping we could just sell the land and find somewhere else to build our home.

That's quite a different question from what you suggested in your OP? Of course you can sell the property whenever you want - all the lender will need is the balance due to them repaid from the proceeds.

If I remember correctly we've put some sort of insurance in place before we started the process, I wonder if that'll help?

Depends what sort of insurance it is!

ProDave

Does the land need raising or lowering?  Is this a planning height restriction on the building?  More details might actually find a resolution.

Lowering ground level is usually just digging and muck away.  Raising it is usually deep foundations (built from the ground that is there) and infill around the now raised house level.  Leveling a sloping site is usually a combination of those, get it right and no need for muck away.

There is a saying in building along the lines of the cost is unknown until at least the point the foundations are out of the ground.

Having the chance to self build is a great thing, (we have just finished second self build)  If you do give up at the first hurdle and sell it, you might not find it easy to find another plot to try again.