When to start the mortgage application process?

[SuperJohnG]

Hi all, 

 

I'm currently in the process of finalising buying my plot of land which I will purchase outright with savings. 

UPDATE: I do have a fairly comprehensive budget together already for the total development costs and also basing on £1200/m^2 for a 200/m^2 house. So I have a pretty accurate understanding of what I will need. 

 

I've previously interfaced with Buildstore and went through with an advisor for pre-application advice. Kind of like an agreement in principle over the phone to say how much we can possibly get which seems fine. However I stopped the process at that time as I hadn't finalised a land purchase and didn't want to apply.

 

However my question is - when would you do (or when did you do) the formal application and would you do it with a number of companies?. I would think I should wait until the land transaction is complete - but I see some post saying it can take 5-6 months?. 

 

Also can you do the application then get approved but not actually take the money straight away? you just remain approved until the point you require the money?

 

In my timeline, I plan to complete transaction for land within the next 8 weeks, then from there start to progress the design with an architect / AD / Timber frame company. Then I will get everything in place and I would think break ground maybe next summer once I have fully planned the build.  

 

So any advice, pitfalls and pearls of wisdom greatly appreciated. 

 

 

Edited September 23, 2019 by SuperJohnG
Extra information added.

[Thedreamer]

24 minutes ago, SuperJohnG said:

Hi all, 

 

I'm currently in the process of finalising buying my plot of land which I will purchase outright with savings. 

 

I've previously interfaced with Buildstore and went through with an advisor for pre-application advice. Kind of like an agreement in principle over the phone to say how much we can possibly get which seems fine. However I stopped the process at that time as I hadn't finalised a land purchase and didn't want to apply.

 

However my question is - when would you do (or when did you do) the formal application and would you do it with a number of companies?. I would think I should wait until the land transaction is complete - but I see some post saying it can take 5-6 months?. 

 

Also can you do the application then get approved but not actually take the money straight away? you just remain approved until the point you require the money?

 

In my timeline, I plan to complete transaction for land within the next 8 weeks, then from there start to progress the design with an architect / AD / Timber frame company. Then I will get everything in place and I would think break ground maybe next summer once I have fully planned the build.  

 

So any advice, pitfalls and pearls of wisdom greatly appreciated. 

 

 

 

I had the mortgage done and dusted in the early spring and made the first drawn down in early Autumn when Wind and Watertight.

 

You will need to have an good idea of the costs in order to complete the mortgage application. I had some rough costs in my head but once the building warrant detail was prepared I was able to provide a reasonable estimate of the costs to satisfy my lender.

 

Once you have obtained planning I would be getting services installed. This will eliminate any unexpected costs and make sure on day one your builders have access to water/electricity. 

 

 

 

[SuperJohnG]

23 minutes ago, Thedreamer said:

 

I had the mortgage done and dusted in the early spring and made the first drawn down in early Autumn when Wind and Watertight.

 

You will need to have an good idea of the costs in order to complete the mortgage application. I had some rough costs in my head but once the building warrant detail was prepared I was able to provide a reasonable estimate of the costs to satisfy my lender.

 

Once you have obtained planning I would be getting services installed. This will eliminate any unexpected costs and make sure on day one your builders have access to water/electricity. 

 

 

 

Thanks @Thedreamer . Updated my first post - I do have a pretty comprehensive budget for the development as a whole based on 1200/m^2 @ 200m^2 house. Soreally once I come to design stage, thats when I will tweak to design to suit my specific budget. 

 

I have costs for power and water coming from SPE and Scottish water in the next few weeks but I was planning to hold off for those and time it with the kit going up as my costs are in the region of £20k for power and dont know about water yet. but there won't be any (significant) unexpected costs from this aspect. But these are outlays I'd rather avoid till I have to as it uses up all my spare captial as they want paid upfront. 

 

[Thedreamer]

4 minutes ago, SuperJohnG said:

Thanks @Thedreamer . Updated my first post - I do have a pretty comprehensive budget for the development as a whole based on 1200/m^2 @ 200m^2 house. Soreally once I come to design stage, thats when I will tweak to design to suit my specific budget. 

 

I have costs for power and water coming from SPE and Scottish water in the next few weeks but I was planning to hold off for those and time it with the kit going up as my costs are in the region of £20k for power and dont know about water yet. but there won't be any (significant) unexpected costs from this aspect. But these are outlays I'd rather avoid till I have to as it uses up all my spare captial as they want paid upfront. 

 

 

£20k for power, must be some work there.

 

I would recommend reading the electricity connection threads.

 

Are you building in Scotland? I got a grant from SSE for our electricity connection.

 

My view on services, is that it is similar to land costs, although it costs money, it also adds value to the plot.

 

What are you planning for foundations/kit construction portable water and generators?

[SuperJohnG]

45 minutes ago, Thedreamer said:

 

£20k for power, must be some work there.

 

I would recommend reading the electricity connection threads.

 

Are you building in Scotland? I got a grant from SSE for our electricity connection.

 

My view on services, is that it is similar to land costs, although it costs money, it also adds value to the plot.

 

What are you planning for foundations/kit construction portable water and generators?

 @ThedreamerIt's rural so coming from 370m away across a field. Mains water is 400m away and although they have told me there is capacity....I'm awaiting a connection cost. 

 

yes it is in Scotland - Any info on the grant, or notable connection thread, as that would be great!

 

I've asked for building water connection so may do that early, on electricity I am assuming we can get ground works and foundations in without any, then time it so the power is done right after the kit is erected on site. 

[SuperJohnG]

@Thedreamer seems the grant is only available for people North of Dunblane. Bit rubbish really!  

[ultramods]

I would suggest speaking to companies that you are interested in ASAP.

 

We got a decision in principle from Buildstore, however we didn't get proper approval until we have formal planning permission for our house design and a buildstore 'QS' has calculated that we could afford to build the house based on our savings and they requested mortgage.

[Jeremy Harris]

One word of caution, that may be just bad luck on our part, or may be something that can still happen.

 

I arranged a mortgage with Santander to cover the balance we needed to complete our self build.  The mortgage was on our existing house, which was mortgage-free, and was only modest (around 40% of the value of the house at that time).  I did this in plenty of time (around February/March, when we thought the build proper would start around September).  All went well, I paid the fees, the mortgage was agreed, and all the paperwork signed,  mortgage deed drawn up, etc.  Because we didn't need the money until the second stage payment for the house frame, I told Santander that I wouldn't be drawing down on the mortgage for a while, and they were fine with that.

 

Skip forward to October, and we needed to draw down on the mortgage to pay the second stage payment .  I went into the local branch to request this drawdown and was told that the bank policy had changed, and that the mortgage had been cancelled, leaving us with no way to pay the stage payment...

 

I did battle with Santander for ages to try and sort this out after the event, but so far they've not even apologised, let alone refunded the hundreds of pounds we paid for the valuation, mortgage deed, arrangement fee etc.  Needless to say we no longer bank with them, and wouldn't touch them with a bargepole.

 

We ended up getting another mortgage arranged in a hurry, and paid through the nose for it, as we had little choice, but I deeply regret not just drawing down on the mortgage as soon as it was approved and sticking the money in a savings account, even if that did mean paying a few months extra interest on the mortgage when we didn't really need to.  Caused a heck of a lot of stress at the time, something we could have done without at that stage in the build.

[redtop]

we need welfare facilities for the foundations, so toilet and somewhere to get out of the rain / make a brew which seems fair.  Much easier to sort if you have services on site as you can just throw up a temp shed, plumb a toilet into the sewer and use electric for kettle / light. We even threw in a 4G wifi; keep the workers happy and they are more likely to stay around on the days when the weather is c**p

 

I would be getting services in as early as possible TBH

[Conor]

Highly recommend Ecology for a mortgage. Bang on 4 weeks from posting application to getting offer, which is valid for three months. We were super organized and had very few queries back from us, just one missing bank statement and employer references. I'd allow at least 2 weeks to get your self organised for the application. So you want to be starting the process 6-8 weeks before your start date.

 

We're planning to draw down on 1st November, day after our current residential mortgage deal ends (so no exit fee). Have demolition / ground works contractor pencilled in for then (but dependent on electric being disconnected and building control drawings submitted, but both on schedule). Contractor is taking on role as principle contractor for demolition and ground works, so will be responsible for insurance, welfare etc. I priced a couple insurance providers and neither would cover demolition or excavations over 2.5m deep...

Edited September 23, 2019 by Conor

[Thedreamer]

7 hours ago, SuperJohnG said:

@Thedreamer seems the grant is only available for people North of Dunblane. Bit rubbish really!  

 

Sorry about the grant.

 

Our connection consisted of a road opening and 220 meters going back to the transformer cost us around £5k to £6k around 4-5 years ago.  

 

You should be fine with no electricity for foundations. 

 

We stick build our house so needed electricity for saws. If building a kit most of the work would be done with a nail gun.

 

But having electricity is definitely handy.

 

 

[soapstar]

We are in a similar situation in regards to when to start the actual application. Having received a 'decision in principle' (more a chat over the phone) with Buildstore they seem to agree that we can successfully obtain all the funds required for our build - but this is depending on the formal application.

 

The predicament I am in at the moment is when to actually start the mortgage application, they say it takes approximately 8-10 weeks, with the mortgage decision being valid for 3 months, and dont forget your land valuation (which they carry out) being valid for 6 months, if you fall out with this time frame you have to pay again for re-application if over the 3 months (only £100 or so) or a re-valuation if over 6 months (expensive!).

 

We are hoping to start the build around April next year - so my thinking was to start the application towards the end of October to allow time to be wrapped up for Christmas (no pun intended :P), this would then leave us around 4 months until starting to fall within the limits.

 

Perhaps this is too far in advance going by what some people say however the bit that confuses me is if we start 8-10 weeks before starting it could easily all fall through and by this point we would have a builder all ready an waiting to start!?

 

 

[JamesM]

I am currently in the BC stage so am waiting for the pre-construction approval to be granted. Once this is done, then I will apply for my mortgage. I too also had a DIP through Buildstore but complications with my project meant the project cost shot up 50k so I will have to "re-apply". The main required the mortgage company requires (which is blocking me fro making the application now) is the Building Control approval. Insurance and Warranties can be organised simultaneously (from my understanding) and are not needed in order to get a formal offer from a lender.