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Financing & Insurance

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mike2016

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I've been spending the last week or two chasing banks because of a clause in the Self Build Costing Template - "*Standard Timber Frame Structure with traditional block exterior". I've found they nearly all have a timber frame line in their stage payments due to front loading of the mortgage when using a factory built house, but they all without exception carry the clause above. I'd not queried this up to now but decided to chase it. I've enquiries out now with several banks but so far only 1 persistent customer services lady has gotten back to me with the news that they are happy to lend for a "pure" timber frame as it's common now and they are A Rated alongside masonry. They are looking for a 15% contingency and a max 80% LTV in their particular case so I'll have to do my sums. They are the second cheapest in terms of interest rates which is great but once built I should be free to switch down the road hopefully. 

The main thing is that there is at least one lender I can go to to avoid having to build block work around my house just to keep the bank happy! 

 

The other thing I've started looking into is insurance. Timber Framed houses are seen as a higher risk compared to Masonry. They claim it's two fold - higher fire risk and higher repair costs. Say I pay 325/yr now on a masonry house, that will go up to 550 at least for an equivalent timber frame. There are specialist lenders that might do better but I can see 550 turning into 1000 by the time I retire which reduces the benefit of a passive house low running costs somewhat. Maybe by then the market will have equalized of course as more timber frames are built but we'll see. Something to think about anyway. It's not enough to sway me away from TimberFrame but these are the peripheral considerations I need to bear in mind. Anything in the build method that increases ongoing expenses or limits my ability to switch between lenders later is a concern. 

 

Over half way through planning permission. No sign of any objections which is great. Looking forward to the end of the month to see what the decision is or any requests for information come up. I'm hoping to crack on with the tender process if it's positive so need to manage my savings carefully to allow for that. My plan is to go to tender Q3 2018 and Start building Q2+ 2019 after I sell my house but we'll see. Things often take longer than you expect! 

 

Finally I've been enquiring about self-build insurance and when to start it. I'll have three phases:

  • Realignment of new driveway onto old house / Bringing services to site / Creating new boundary fence between existing property and site
  • House sold - need public liability on site only
  • Commencement of build on site

I'm getting different advice from various providers. Some reckon I can use the contractors insurance for the first phase above, then a 12 month public liability policy on the site followed by a full self build policy for the build when it starts. Others recommend a longer (18 month) self build insurance package for all 3 phases. You just have to avoid a cessation of works clause when it's just the site and you're waiting for the build to start (3-4 months in my case due to placing order for timber frame and lining up a builder once house sale completes). So working on clearing the site, building a site shed and keeping a diary of works would keep the policy from lapsing. You're then covered at all stages from your builders insurance proving inadequate or if I get injured doing some jobs around the site. I've to check that the builder has both a combined liability policy for the public and as an employer in addition to contractors all risk. The second covers you if the building is 99% completed and burns down. Notably theft is the number one reason for a claim in this country. Once the build is finished there is a cessation of works clause so I'll need standard home insurance cover ready to take over at that stage. 

I don't think a 12 month public liability policy will work out good value so I'll probably opt for a self build policy but just need to decide if it should kick in after I sell the house and I'm left with a site, or if I start it when the groundworks commence before I sell (Driveway, services, boundary preliminary phase). I'll shop around anyway and think about this further before deciding. 

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