Self build mortgage

Self build mortgage

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Roo3Stuart

Original Poster:

287 posts

159 months

Tuesday 7th July 2015
quotequote all
Hi all

I posted this in home and DIY but thought I'd ask here too.

I'm looking for recommendations for mortgage providers or brokers for a self-build. My existing bank has a reasonably prudent approach and I am interested to know if this is normal. The property I'm interested in has a house on it but one option is to tear down and start again which I understand requires a different type of mortgage. Rough numbers from the bank for what I am looking at: Value of property with new house on it - £1.8m, less build cost £500k less risk factor £300k = value of consented land. They will then lend 50% so £500k. I'll need to borrow some money to buy the property in the first place so there won't be enough to fund the £500k build. I had simplistically thought I could borrow say £800k - £300k to help fund the property and £500k to fund the build - I have £700k of equity. The property with existing dwelling is worth £1m. I'm hoping there are other providers who take a less prudent view (and as I say very rough numbers to give an idea).

Any experience/recommendations welcome

Thanks

Sarnie

8,025 posts

208 months

Wednesday 8th July 2015
quotequote all
Roo3Stuart said:
Hi all

I posted this in home and DIY but thought I'd ask here too.

I'm looking for recommendations for mortgage providers or brokers for a self-build. My existing bank has a reasonably prudent approach and I am interested to know if this is normal. The property I'm interested in has a house on it but one option is to tear down and start again which I understand requires a different type of mortgage. Rough numbers from the bank for what I am looking at: Value of property with new house on it - £1.8m, less build cost £500k less risk factor £300k = value of consented land. They will then lend 50% so £500k. I'll need to borrow some money to buy the property in the first place so there won't be enough to fund the £500k build. I had simplistically thought I could borrow say £800k - £300k to help fund the property and £500k to fund the build - I have £700k of equity. The property with existing dwelling is worth £1m. I'm hoping there are other providers who take a less prudent view (and as I say very rough numbers to give an idea).

Any experience/recommendations welcome

Thanks
£500k is the ceiling for a lot of Self Build lenders.

The problem with demolishing a property is that most lenders won't begin lending till the footings stage meaning that you have to fund the purchase of the property, property demolition and first stage of the build yourself.

Also, to lend £800k, your income will need to be at least £200k a year............

Roo3Stuart

Original Poster:

287 posts

159 months

Wednesday 8th July 2015
quotequote all
Thanks, I can see this is going to be interesting!