Self Build Mortgage v Bridging Loan v Personal Loan ??!!

drumlinruby

Hello All, we are currently building our new home. We've used the sale proceeds from selling our old house and are about 80% finished. Our lovely mortgage adviser has spent the past year trying to arrange us a self-build mortgage so we have enough to finish.
Build Loan who oversees selfbuild mortgages have been a nightmare to deal with. They request more and more information such as letters from friends helping us do some of the work to formally agree in writing they have no claim on the house!
Despite our Loan to Value being at 8%, we haven't even received an offer yet. Our mortgage adviser foresees that as the building societies will only lend for a minimum of 12 months then we may waste all this time only for them to say as you are likely to be finished within the year then we will not lend to you.
The aim is to finish, get the house signed off & switch to a residential mortgage.
Our adviser has suggested a Bridging Loan, which have shocking costs, but wondering if a personal loan might be possible but is there an option to pay it off in one go at the end rather than monthly instalments?  
Has anyone else come up against this problem?
Any other suggestions much appreciated!! Thank you!! 

amnblog

Getting self build borrowing mid project is notoriously difficult.

Your Broker is probably right about a bridging loan.

You have not said what "8%" equates to. If not more than £25,000 your may get an unsecured personal loan.

drumlinruby

amnblog said:

Getting self build borrowing mid project is notoriously difficult.

Your Broker is probably right about a bridging loan.

You have not said what "8%" equates to. If not more than £25,000 your may get an unsecured personal loan.

Thank you. It is over £25,000 we would like to borrow. We could borrow less ( but would still be over £25k) but then borrow more when we switch to residential to do landscaping/finishing touches, etc but appreciate that doesn't help us at the moment. I am just surprised really. Even if the house burnt down the building plot & land alone would be worth 3 possibly 4 times what we want to just finish off!! 

ACG

How much do you need?
How long do you need it for? 

How much would it cost you to get it habitable (watertight, heated, hot water, kitchen and bathroom) and signed off with a warranty? It might be worth aiming for that and then getting a mortgage.  

drumlinruby

ACG said:

How much do you need?
How long do you need it for? 

How much would it cost you to get it habitable (watertight, heated, hot water, kitchen and bathroom) and signed off with a warranty? It might be worth aiming for that and then getting a mortgage.  

Looking for approx £100k for about 4-6 months. This will get it finished and signed off. We will then swap to residential mortgage & borrow anymore that we need to do any further work. 

ACG

I dont think you can get a personal loan for £100k. I think it tops out at £35k (but I could be wrong). 

A bridge, although expensive is maybe 1% per month. That will mean it costs you £5-8k for the £100k? Its only for a short period of time. 

Im not trying to convince you to go down the expensive route, but a self build might be cheaper but is clearly a lot more hassle. How much time will you lose waiting for the mortgage, valuation and legals? A Bridge can probably be done by the end of the month if not sooner. 

amnblog

This is a bridging situation.