August 20, 20206 yr So, the scenario is: 1) we (wife and I) own our current house (self build 15 years ago) - no mortgage 2) we own the plot for the next self-build (no loans) 3) we have some savings - probably keep some back to cover 'boiler blowing up scenario' on current house and other life costs 4) will need to borrow money to complete next build - savings will pay for ground works and some superstructure 5) we are both have regular incomes What options are out there? Thanks.
August 20, 20206 yr Self build mortgage for your new project (I recommend Ecology), interest only loan so low payments, which you pay off with sale of current home. your circs were very similar to mine. Except we accepted an early offer for our house just before lockdown and we ended up in a rental, so we didn’t have to borrow as much as expected. if I were you though I’d keep your savings ring fenced and borrow for the founds. Edited August 20, 20206 yr by Bozza
August 20, 20206 yr You can borrow against your house then pay the mortgage off when you sell your current home say three years
August 20, 20206 yr I'm in exactly the same scenario with the exception that I didn't build my current house . I am just finalising with ecology for the full whack to build new house and part is interest only (up to value of current house) the rest is a repayment basis.
August 21, 20206 yr Self build mortgage will have higher interest rate than one for a already built house. I would be inclined to mortgage your current home to a sensible LTV e.g. 60 or 70% so you can get the lowest interest rate. Do the maths, do work in various application and early redemption fees depending on your scenario. Also a self build mortgage will usually mean you pay for stage inspections aligned to the release of funds.
August 21, 20206 yr 5 hours ago, ragg987 said: Self build mortgage will have higher interest rate than one for a already built house. I would be inclined to mortgage your current home to a sensible LTV e.g. 60 or 70% so you can get the lowest interest rate. Do the maths, do work in various application and early redemption fees depending on your scenario. Also a self build mortgage will usually mean you pay for stage inspections aligned to the release of funds. As I said Equity release is by far the cheapest option
August 21, 20206 yr We re-mortgaged current property at about 40% LTV which paid for land purchase and will fund groundworks and first floor superstructure. Savings after that. Then pay off mortgage once finished and sold current property.
August 21, 20206 yr Its definitely cheaper on equity release. I planned to release 100k at a nice 1.5% from my current property (valued 150k) but I need a total of 400k for build and hence still needed self build mortgage. But by the time I had paid two mortgage fees and two conveyancing fees etc it became pointless in getting the 100k at the lower rate and hence opted for full lot with ecology.
August 21, 20206 yr Author Thanks folks - this is really useful stuff. Wife and I chatting this morning and were thinking that releasing equity on current property with an interest only loan/mortgage might be the way forward. Our current house is worth circa £300k and our estimated build cost is £220k. We already own the building plot so I'd like to think that we are a relatively low risk case - 'asset rich, cash poor'. Any pointers to finance orgs who would provide that kind of service?
August 21, 20206 yr 4 hours ago, SuperJohnG said: Its definitely cheaper on equity release. I planned to release 100k at a nice 1.5% from my current property (valued 150k) but I need a total of 400k for build and hence still needed self build mortgage. But by the time I had paid two mortgage fees and two conveyancing fees etc it became pointless in getting the 100k at the lower rate and hence opted for full lot with ecology. Can you give me any pointers on the best way of getting equity release? When I tried to remortgage my current house, no one entertained it as I didn't earn enough
August 21, 20206 yr 7 minutes ago, Vijay said: Can you give me any pointers on the best way of getting equity release? When I tried to remortgage my current house, no one entertained it as I didn't earn enough Self employed ?
August 21, 20206 yr Problem theses days is the regulations on "affordability" mean there is less discretion for banks to lend against capital assets alone. The rules more or less require loans to be affordable in income terms as well.
August 21, 20206 yr 8 minutes ago, Vijay said: Nope, self builder Thought it was the old banks hating self employed
August 21, 20206 yr 10 hours ago, Vijay said: Can you give me any pointers on the best way of getting equity release? When I tried to remortgage my current house, no one entertained it as I didn't earn enough Do you have equity available? And can you support the release of the equity and repayments? These are the basic elements of getting approval.
August 22, 20206 yr 8 hours ago, SuperJohnG said: Do you have equity available? And can you support the release of the equity and repayments? These are the basic elements of getting approval. I do yes and at 1.5%, easily. Just never looked into it before as I never thought it an option for my self build..........................
August 22, 20206 yr 31 minutes ago, Vijay said: I do yes and at 1.5%, easily. Just never looked into it before as I never thought it an option for my self build.......................... It's just the same as a normal remortgage instead of releasing equity for an extension or so forth its to start a new build.
August 22, 20206 yr thank you, something I'm definitely gonna have to look into now. Is it best to go through a mortgage adviser?
August 22, 20206 yr 3 hours ago, Vijay said: thank you, something I'm definitely gonna have to look into now. Is it best to go through a mortgage adviser? A broker of some kind yes. Money-saving expert website has lots of good advice about remortgaging. LANDC.CO.UK are a good mortgage broker and all done online. I've used them a few times and would recommend.
August 22, 20206 yr 3 hours ago, SuperJohnG said: A broker of some kind yes. Money-saving expert website has lots of good advice about remortgaging. LANDC.CO.UK are a good mortgage broker and all done online. I've used them a few times and would recommend. Thank you so much, I'll contact them this week and see my options
February 3, 20215 yr On 20/08/2020 at 22:46, SuperJohnG said: I'm in exactly the same scenario with the exception that I didn't build my current house . I am just finalising with ecology for the full whack to build new house and part is interest only (up to value of current house) the rest is a repayment basis. i like the idea of staying in current home until build done but if i were to borrow the full amount for build i.e 230k it would be way over the 4x salary multiple for myself and wife which is roughly 120k, my house is owned though and worth 105k do you think theyd lend me the full amount?
February 3, 20215 yr 2 hours ago, Amateur bob said: i like the idea of staying in current home until build done but if i were to borrow the full amount for build i.e 230k it would be way over the 4x salary multiple for myself and wife which is roughly 120k, my house is owned though and worth 105k do you think theyd lend me the full amount? Hard to tell. Just call and ask. You'll get the 105k interest free essentially. But they don't base specifically on multiples. They do it on affordability.
February 16, 20224 yr Hi, coming to this late as i am almost in the same situation. Did look several years ago for plots but never found one. So spent the savings on a small bungalow and put elderly parents in it. They are still there so cannot release the funds. however, that means we own outright two properties. estimated equity over £600k. but we dont have much income as hubby is retired and I only work a small amount as busy looking after parents! However, I have come across two plots which we could develop (part of bungalow garden and a friends bottom of garden) without having to pay for land till its finished and we sell. Would equity release be the best way of raising £200k to build something small? I shall look at L&L too but if anyone has any thoughts, I'd be grateful. We do have some savings (£30k) but would rather not touch that unless we have to.
March 8, 20224 yr On 16/02/2022 at 14:16, TheMitchells said: Hi, coming to this late as i am almost in the same situation. Did look several years ago for plots but never found one. So spent the savings on a small bungalow and put elderly parents in it. They are still there so cannot release the funds. however, that means we own outright two properties. estimated equity over £600k. but we dont have much income as hubby is retired and I only work a small amount as busy looking after parents! However, I have come across two plots which we could develop (part of bungalow garden and a friends bottom of garden) without having to pay for land till its finished and we sell. Would equity release be the best way of raising £200k to build something small? I shall look at L&L too but if anyone has any thoughts, I'd be grateful. We do have some savings (£30k) but would rather not touch that unless we have to. whats l and l?
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