John Cain

Exactly what I wanted to hear! (but ha, I'm aware of what confirmation bias is.. I think I want to play it a bit more safe..) . It sounds like a sensible point though that indeed repossessing is a major headache for mortgage companies so as long as they don't see their payments drying up and don't see evidence of financial trouble otherwise, it does seem like they'd prefer a smooth solution rather than the 'litigious' approach..

Thanks JSHarris, but that indeed is what I was assuming/counting on too. Meaning: House purchase price: 500K House future price: 700K House current price: 350K Seems about what i had in mind... I'm aware that's the high end of your estimate but when looking around, many sites seem to land at "plot value is over 50% of the total value", even when the house is acceptable or even brand new. Instead, my house is terrible (currently) so while I was clearly too optimistic with my "90% plot value, 10% house" estimate, I think maybe 50-50 is indeed a safe bet, where 60-40 is my current best guess, at least in my location where plots are really expensive.

Ah yes, no I took out a separate insurance for the build process (indeed the old, standard insurance would be void if I started modifying). I thought somehow the 'mortgage trouble' would impact my ability to claim...

OK I think I'll brazenly go for halfway between MrPunter an my guess, so 70% = 350K. My 60% LTV - I paid 200, they paid 300 to the house sale. At this point, if the house is worth 350, given my 200 deposit ... hm frankly I'm a bit confused how to work out these calcs, am I on the right track here? Will see. And the CEO was okay with your assurance and everything worked out hopefully? Well, as above surely they can get their loan back if they are allowed to sell the place, 300 seems doable. But then what about the 200 I spent on this?

Useful, if not encouraging point. not completely surprising though that a part house is a 'hassle'. That said, my plot is super central in a city with a terrible house so I still feel the value of the plot is definitely the bulk of the price.

Hopefully this would be doable. Interesting idea.. depending on what they say (how much 'increased risk' there is is surely debatable.. ). Let's say our 500K home+plot is now worth 400K until I succeed in turn it into a 700K magic palace, is the risk really 100K? Surely it's more like "25K" (if 1 in 4 builds fails?). 25K I can do.. 100K.. um.. Hopefully! Indeed. Thanks

Perhaps this is some 'due diligence' thing.. the banks should (?) be happy as long as they get their mortgage cash every month, and situations like this are not worth the hassle.... but if they learn of such a violation they might have to follow up? (paranoid cap on.. could it be the neighbors after all..) Clearly I'm exhibit A for risk... (although I guess we'll have to see how bad this bad situation turns out. ) But let's say the builder goes bust or I hit some financial or medical hardship and can't finish the build.. that means that the property lost (say) 15% of its value permanently and I'd have to tell the mortgage guys.. not ideal, but as discussed earlier in this topic, it hopefully will be a re-negotiation not a blunt axe coming down on your head.. Insurance - @Alex C: do you think this situation affects insurance somehow? My building insurance never asked for any mortgage details, why would they care if that part is handled properly or not?

Well the situation is unusual. Assuming no 'legal' action they might at least boot me out with/without exit fee (upon which I would have to get some, probably unfavourable mortgage on the spot). Alternatively they might want to renegotiate to a crazy premium themselves (could I refuse?)

(Day 2.. and still no letter.. - but I doubt I got lucky somehow) Does anyone have experience with remortgaging a standard mortgage into a selfbuild like @newhome said? My current mortgage lender doesn't offer a selfbuild, but might make an exception somehow, on the other hand selfbuild mortgages seem to have rates around 5% - is that what I can look forward to, or will they squeeze me since I'm in urgent and unexplored territory..

Ha, well, my sleep typically gets easier with more info, even if it's not great news, it's still better to be prepared than be surprised. Selfbuild mortgage> hopefully not much more than if we went with this in the first place? And, I've not heard of my lender even offering self-build mortgages. Would they try to make an exception? Eh, we looked at that but sadly conservation area, in keeping etc etc.. so it's more of a hollowing-out project, and we were advised to go with this approach

Eh, I'm one of those pre-planners, so if it's a good idea to start collecting a bit of data it makes me sleep easier at night.. (hopefully better than last night.. sigh) And regardless, it does seem logical that the lender would at least move me onto a mortgage that reflects the - temporarily - increased risk, lower value?

Will try. Does anyone know what I might need to remortgage mid-build like @Temp suggested? Is it: - Pay back my current lender by starting a mortgage with a different lender or - Start a new mortgage with current lender, under less favourable terms, presumably or something else? Current mortgage is 5y fixed + offset. And in that case, what would a lender (new or current) look for, will I be pressured into a very unfavourable conditions since I'm in a hurry? Effectively "at this stage" the lender would almost be lending against a plot of land with a worthless shack on top, but on the flipside the only money I really need is my that mortgage amount, perhaps with an increased but not crazy LTV (70% perhaps?), the build itself is hopefully covered with our savings. How would I prepare for that discussion, what to expect, what evidence (a few people already suggested building plans, cost estimates etc.. anything else?)

I hope you're right. It's been a super helpful discussion so far, I guess prepare for the worst but it feels I didn't do anything that bad.. but quite worried that somehow contractually/legally it could turn out to be a problem. Yeah the wording on the full materials is vague, and their internet site mentions nothing at all around this situation. Hopefully. Let's see what they say, I guess they don't want you to do this for a reason, I'm all paranoid now so now I'm worrying they might want to make me an example and go after me anyway... but ok realistically they just want this to get sorted, hopefully But yeah most of the responses here sound like the bank wouldn't (be able to?) do something too dramatic like kick us out, repossess or apply a massive fine for me breaking the agreement without going to court, and I hope the courts in general would insist on fair fees/fines, based on the actual amount of loss the bank incurred, which isn't *that* much, I hope. Try to not make it all catch fire. Check. But indeed I hope/think/assume I insured all of this properly... will check.. good shout.

60% - not too terrible...

Thanks.. to be clear yes I screwed up and intend to fix it immediately. Still though, IMHO the bulk of the value is in the plot, the house was terrible (ok you'll be dry in it, but bad design, neglected), but the location is great. Recently, a similar plot without a house was sold for pretty much the same price as my full price. I know valuation is an arcane art but I don't think I killed more than 10% of the total value. (an amount I could even literally pay back right now if I really had to..)

So it's in the bank's interest to get this done successfully, no? No funds, but it will take some time.. if I do everything I wanted to do (and improve the place) it'll be months. I suppose if I literally try to restore to as-close-to-original as I can I guess it can be faster, but no idea, do I have to go back to planning? Redesign? Why do you figure the time is an issue, if I can 'reasonably' show that we're well prepared (financially and planning wise) to get this finished?

@Mr Punter Yeah I don't think this is a deeply financial issue. Assuming I can keep my current mortgage (perhaps at a steeper but not insane interest), we should be able to afford everything without a second mortgage etc. As far as I can tell the main issue is I might have violated contract terms and perhaps done some temporary damages to their "investment" and/or increased their risk.

Um. I do hope you're wrong. I don't think this is so black and white, where until the very last pound repaid, they can do anything they want including kick us out etc. Seems to me bank+us are "co-owners", where the bank does have more power, since they wrote the contract, but we aren't completely at their mercy, there always has some point of 'reasonable balance' between parties? And given that like I said the current house is only a small part of the property value I would hope that yes I damaged their property somewhat (with good intentions.. they count a bit hopefully?), and maybe I took 10% off the total value, but assuming I don't fail I'd add like 50% extra value.... I don't think they can claim we cost them anything near the entire value of the property.. Also - would the bank benefit in trying to now sell the plot of land immediately, and get back only part of the money? Hopefully they also would just want to work this out, or should I brace myself for much more severe steps?

Not quite knocked the place down but it's a pretty serious renovation/extension, so in the end 'most' of the place will be all new. Are you sure? Of course at this point I read through their fine print and nothing too explicit that I think applies. But they can't (shiver) take us to court? Remortgage with them, you mean? Or do you mean they basically demanding I repay everything within a certain super short period of time and then see if I can find a mortgage team willing to talk to us halfway through a mortgage? Clearly that sounds complex but I don't necessarily see why people would not want to do this, the place was old and poor, so the bulk of the value really was the plot anyway. What do you figure will be hard (other than that I would have a certain 'desperate' quality). I assume the mortgage will be unfriendlier but do you think they'll make it extortionate? Yes, will def. chat with them soon, just trying to get to that meeting not completely unprepared so thank you for your thoughts so far. @Mr Punter: I can't really see anyone benefiting from telling the lender (without at least chatting with me first?) .. perhaps it was the neighbours, although they seem friendly enough, they were ok with the plans when we told them, and regardless I don't know how they could've found out which lender we used.. All I can think of is the lender themselves doing spot checks? Not sure why they would even care as long as I keep paying the mortgage as normal. I guess @Temp and @ProDave explained a bit what I hadn't thought of - the risk that I would fail, leaving the value lower, but still, again the current house is really only a fraction of the total property value....

We got planning permission and then went on with a building project, paying out of our savings for the work, no financing was needed for this part. But.. soon after we started, our main mortgage lender called me saying this was against the terms of our mortgage, we should've informed them about plans etc and that mailing would soon follow. Of course I'm shaken, stupidly I didn't realise this was going to be a problem, assuming for a second I succeed in my building plan, the lender will have a more valuable property shortly? What's their actual loss here? Anyone have experience here, on what to expect? Surely they can't kick us out for attempting to improve our (their? our shared?) property? Can they fine us? Withhold the deposit? Try to sell the house (err... in its current state..) No mention of what they'll do in this situation in the contract, since we've been paying the mortgage just fine. I guess we'll have to employ a sollicitor if we have to but just hoping to get a few insights to prepare us.. Thanks!