Finance, self-builds and pensions.
Discussion
I am about to embark on a self-build.
The whole project (including the land) is going to run to about £800K and the final house has been valued by 4 local agents at around £900-950K.
I can do all the above without raising any finance but there is a possibility that I may need to spend a little more (£20K to £50K) to complete everything to the quality required. This additional amount would have to be financed.
Once the project is completed I should have no trouble raising a small mortgage to cover these additional costs but obviously I cannot raise a mortgage before the house is complete. Self-build mortgages only seem to come into play when you want to finance the whole project (including land purchase) so I am trying to work out the best way (cheapest) way to raise the finance before the build is complete.
I guess the obvious answer is a personal loan? Or is there another route I should be looking at?
I was wondering, for example, if there is anything I could do with my pension pot that would make financial sense? I'll be 50 next month and the aim is to stay in the house I am building for 5-10 years and then sell up and downsize when I stop full-time work (although who knows when that will really happen!). I have 3 personal pensions and wondered if there was any clever mechanisms in place to use some of the pension fund for my build?
Cheers!
Gary
The whole project (including the land) is going to run to about £800K and the final house has been valued by 4 local agents at around £900-950K.
I can do all the above without raising any finance but there is a possibility that I may need to spend a little more (£20K to £50K) to complete everything to the quality required. This additional amount would have to be financed.
Once the project is completed I should have no trouble raising a small mortgage to cover these additional costs but obviously I cannot raise a mortgage before the house is complete. Self-build mortgages only seem to come into play when you want to finance the whole project (including land purchase) so I am trying to work out the best way (cheapest) way to raise the finance before the build is complete.
I guess the obvious answer is a personal loan? Or is there another route I should be looking at?
I was wondering, for example, if there is anything I could do with my pension pot that would make financial sense? I'll be 50 next month and the aim is to stay in the house I am building for 5-10 years and then sell up and downsize when I stop full-time work (although who knows when that will really happen!). I have 3 personal pensions and wondered if there was any clever mechanisms in place to use some of the pension fund for my build?
Cheers!
Gary
Beware anyone who suggests "pension release" or something like it. They will make it look like you can, in effect, get all your pension cash now. In fact,it is quite difficult sometimes to actually see what is happening: what actually happens is that you get a loan for the cash and the provider takes the pension off you. The fees are typically about 30% of the amount you get and HMRC are already pulling the plug on this as it is technically illegal, in which case if you go ahead you will also be faced with a tax charge of, I think, 50%. A scam to be avoided.
R.
R.
I would avoid all pension unlocking schemes! The rules are you can't access your pension until 55 yoa, and any schemes that step around that could be subject to tax charges when HMRC catch up with them.
I would just go down the personal loan route, it will be much less painful in the long run.
I would just go down the personal loan route, it will be much less painful in the long run.
FlashmanChop said:
Build cost to Value looks a little high, especially as both figures are more than likely to move, in either direction.
CC are the best bet - where exactly are you thinking of increasing spec? Kitchen & bathrooms ?
I'm in Canford Cliffs - plots of any sort are expensive, let alone new single ones!! For a commercial venture the ratio is wrong, but this is for a self-build to build the house that I've dreamed about since 1999.CC are the best bet - where exactly are you thinking of increasing spec? Kitchen & bathrooms ?
As I said at the beginning I MAY require the money; it's not a definite. Some spec up will definitely be the kitchen (although I would guess no more than £5k), but also things that I was going to put off till later but would be more cost effective (no VAT) during the build such as electric gates. I also want to ensure there is adequate contingency (even though I have a fixed cost price) as I know that as the build progresses there could be things I had not factored into my budget.
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