Self build mortgage not an option - any others?

swingy

Hi all, hope someone can help? 

We are a young family who are moving from the UK to Ireland where I am from. 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, we’ve extensively remodelled ourselves before and we know what we’re doing wrt build - it’s just a matter of cash flow right now. Any thoughts?

bleepbloopblorp

Almost everyone will have a clause stating that lending cannot be used to purchase property.

You'll need a mortgage, and a UK lender will not lend to you for a foreign property.

In theory credit cards and overdrafts could be legally used for this purpose, as they do not ask about the purpose of the credit. But they also charge 25%+ interest, which would absolutely cripple you.

swingy

Would we be likely to be charged 25% interest on credit cards? The ones we have right now are (MSE approved) 0% interest, but perhaps if they were lending more to us, they would charge more than that?

swingy

Also technically speaking, we wouldn’t be purchasing property, we’d be using it for materials to build a property. 

Nebulous2

How much equity do you have in your UK property? Will you have a UK income?

You might be able to remortgage your current house. 

bleepbloopblorp

swingy said:

Would we be likely to be charged 25% interest on credit cards? The ones we have right now are (MSE approved) 0% interest, but perhaps if they were lending more to us, they would charge more than that?

As soon as you start applying for cards, the beneficial offers and limits will reduce.

If you think you could get to 100k on credit cards you're living in fantasy land.

If you think you could borrow 100k on credit cards at 0% you're certifiably insane.

You might be able to get 100k on a credit card as a limit if you're a multi-millionaire and you apply to AMEX, but a "young family" would be lucky to get anything.
And you already owe over 6k, if your usage of "a few thousand" is correct.

mcpitman

bleepbloopblorp said:

swingy said:

Would we be likely to be charged 25% interest on credit cards? The ones we have right now are (MSE approved) 0% interest, but perhaps if they were lending more to us, they would charge more than that?

As soon as you start applying for cards, the beneficial offers and limits will reduce.

If you think you could get to 100k on credit cards you're living in fantasy land.

If you think you could borrow 100k on credit cards at 0% you're certifiably insane.

You might be able to get 100k on a credit card as a limit if you're a multi-millionaire and you apply to AMEX, but a "young family" would be lucky to get anything.
And you already owe over 6k, if your usage of "a few thousand" is correct.

I must be insane then, if needed I could raise 100k at 0% against my current credit limits. I wouldn't want the charges, and no way could I pay that amount back in 18 months, but that's another point entirely.

OP - could you remortgage your current house, build new house using funds and then sell current home? 

swingy

I don’t think you’ve quite understood my post @bleepbloopblorp. We have funds coming we can use to pay off the loan we have, plus the 0% credit cards.

I’m not trying to borrow 100k on 0% cards, I’m trying to work out how much we could borrow, roughly, via loans with the providers we’ve had past paid off loans with (so Barclays, paid off wedding loan, and the car loan, different provider).

That make sense?

Nebulous2

Nobody knows what is likely to happen - credit could tighten going into a period where the economy takes a downturn. Something on your history could spook them. Multiple hard searches could spook them. Generally unsecured lending becomes more difficult to get if you go over 50% of your income. Lenders don't like changes - like moving home / employer etc. 

In the past it has been said on here that applying rapidly - possibly same day has best chance of success, before they catch on about the other searches loans. Of course their reporting may have tightened up since then.

I once borrowed over £33k in 2-3 days. Mainly on 0% credit cards (new applications) as a money transfer, but there was one loan. It was surprisingly easy - but I didn't need it, only wanted to try stoozing. I made a modest amount of money on it. I didn't expect to need any major credit again. Then about 18 months later I decided to buy a second home,  by mortgaging my main one, and the lender told me I needed to take my credit card debt below £10k to get what I wanted, so I had to repay the bulk of it. 

That was only a third of what you want however. I think you are into very difficult territory, and your  chances are extremely slim, unless you have a family income well over £100k, but I doubt if anyone can say.

We have seen people on MSE who have funded building projects with credit cards, who then run out of 0% time, can't refinance and are in a very bad place.  

swingy

Thanks @Nebulous2 that’s really useful!