Hi all,
Are there any finance people out there? If so, I would very much welcome your thoughts on the below please.
My godfather has a parcel of land that he is looking to sell. Whilst he is looking to maximise value, he would be open to structuring a deal that could maybe allow myself (& my young family) to potentially purchase it. It's a great piece of land.
The land is valued at £400,000
Build Costs would total circa £350,000- £425,000
Properties in the area for a similar house are in the region of £1.3m - £1.5m
Our combined income is £85k.
I know that we cannot afford to purchase the land. However, given our relationship with the seller, is the below proposal (from a finance point of view) possible.
I purchase (STP) the land at, say £100,000 cash (savings).
We get a self build mortgage for £350,000.
We complete the self build and then re-finance at say £1.3m
We remortgage on an interest only mortgage at £450,000, which is at a level we could afford. (£350,000 (from the self build mortgage) + £100,000 (in equity to be paid to the seller).
The seller would have therefore received £200,000 (of the £400,000)
Is there potential to then take out a secured loan for the remaining £200,000 against the equity we would have in the new home (circa £850,000)
If so, we can then use that loan to pay off the final £200,000.
We would therefore be left with:
Interest only mortgage on £450,000 (c30% LTV) paying say c£500pm
Secured loan of £200,000 paying c£1,750pm+
Equity in the new house at c£850,000
Many thanks in advance,