Self build mortgage not an option - best alternative option?

swingy

Hi all, hope someone can help? 

We’re a young family wanting to move from the UK back to the ROI where I’m from, and we want to raise money for an alternative home build. It will be built using tried and tested methodology and all plans checked by an architect and ensuring it can be built to regs etc - but the ROI where we will be living has very conservative lending policies for self build mortgages, more so than the UK, so from what I understand a mortgage will not be an option.

We have enough to buy the site outright, (plus a bit more but that will be eaten up by moving costs etc so I am disregarding that) and need to raise approx 100k.

Here’s what I’m thinking we should do: We have a few manageable debts (2 x personal credit cards with a few thousand on them each, and a low APR personal loan which we used for our car). 

We also had an approximately 8k loan with Barclays for our wedding which we paid off last year - they’re also our mortgage provider for the house we live in right now. We have about 15k coming in a few months in share profits from work, so what if we pay back some of those debts and see if this then means they are willing to lend significantly more to us which we can use to build with since we have proven we are reliable?

Should we perhaps pay off the car loan and see how much we can borrow from that lender (from their website 25k)? Then check with Barclays how much they will loan us? I’m open to paying off the credit cards too, I’m just not sure whether the additional cash in hand for the build might be more useful, if they are just likely to offer the same smallish amount to us? Are there any other options I’m unaware of?

We’re financially stable, I WFH and will continue to do so while we build, and we will be renting the house we live in in the uk out to a friend we trust so we will have income from that (not selling up our uk property - this is a big move for us and it is important to us to keep it in case in a couple of years we feel we have made the wrong decision we can move back).

If we can get the money together for the build I know we can pull it off - it’s just a matter of cash flow right now. Any thoughts?

swingy

(Just to say we are not phased by the building part - we’ve remodelled x 2 places ourselves before and we’ll be living onsite in a mobile home which we’ll have planning permission for - it’s just the financing.)

K_S

@swingy I don't know if the numbers will add up but to my mind the most straightforward option to raise funds might be to do a capital raise remortgage on your UK property.

Whether it'll be on a residential basis (potentially up to 85-90% LTV) or BTL (potentially up to 75-80% LTV) will depend on the facts.

swingy

Thanks! I’ll look into that.

ACG

Can you not get a mortgage on the land rather than buying it outright? 
Rather than paying off the debts with the money coming in, use that towards the build. 

£100k
Lets say £50k goes on the land and a £50k mortgage on the land. 
That will give you £65k to start the build from what you have said give or take. 

If you have equity in your property in the UK, you might even want to remortgage that for a little more to give you more than £65k. 

Difficult without knowing the figures and also complicated by the fact there are 2 countries involved. 

swingy

Thanks! I was told banks won’t lend for just the land, they’ll want to lend for the whole land + build in case they are then left with a half built property which they can’t sell? But maybe I’m wrong on that?

ACG

The value of the land is probably the same as land with a half built property. So unlikely to be an issue.