Self-Build first steps – advice sought

[scottishjohn]

with all the uncertainty in the world now -i would do as i have done 

 my time scale is short due to my age -- and borrowing is harder 

save up and buy plot with cash --then it don,t matter on time scale -it will always be there for later -or it will be something you can sell on  if you need to.

I would  not be getting into big borrowing at htis time --

you may think your jobs are certain --but what if --you have health problem  as well  as loosing job 

thats what you should  allow for

 I remember the first stocks crash when my pension pot dropped from 700k to 200k in one day --and then took 10years to come back .

it could happen again  very easily with current situation.

 so --find plot first and buy with cash  is my advice-- it will probably be a better investment than alot of things anyway ,if you have to sell

 

[bpk101]

6 minutes ago, scottishjohn said:

save up and buy plot with cash

 

 

That's sound advice, although it would likely take us 4—5 years to save the required cash before we even start looking for land to buy with it.

 

In terms of age, i'm 45 and my OH is 38... in case that has any huge bearing on the mortgage sums i'm doing?

[scottishjohn]

14 minutes ago, bpk101 said:

That's sound advice, although it would likely take us 4—5 years to save the required cash before we even start looking for land to buy with it.

 

In terms of age, i'm 45 and my OH is 38... in case that has any huge bearing on the mortgage sums i'm doing?

all depends how serious you are -- quite sure you could trim lifestyle a bit and make it happen sooner --bear in mind anything you borrow will in the end cost you 2 or3 times as much 

with 245k of an income -you must live very well if it will take you 5 years to save up for a plot -- and if most of that is going on present mortgage ---maybe downsizing ?might release  money quicker to get to your end goal 

 If your serious about self build and want to do it most economical way ,then you need to start economising now,ask most people on here and they will be running older cars etc -cos blowing 10-15k a year on a fancy car devaluation   is not top of their list .

I run an old car 10 years old cost bugger all -if i replaced it with a new model of same car it would be 9k a year  loss against 1k running costs -holidays --where you going to go in next few years with all the covid about 

If you are serious you can save plot money alot quicker than 5 years  I,m guessing 

 all these things are choices you can make  or not -

 Ohh and im just turned 69 and just started --so you got plenty of time --just wish I had started 15 years earlier

 

Edited September 20, 2020 by scottishjohn

[bpk101]

2 minutes ago, scottishjohn said:

all depends how serious you are -- quite sure you could trim lifestyle a bit and make it happen sooner

 

 

My first step was to establish whether a self-build was even a viable option (it looks like it is - for now). My next step is to work out a savings strategy with my OH, she agrees paying cash for land is the better option so let's see what plan we can hash out. 

[Ferdinand]

2 hours ago, bpk101 said:

 

That's sound advice, although it would likely take us 4—5 years to save the required cash before we even start looking for land to buy with it.

 

In terms of age, i'm 45 and my OH is 38... in case that has any huge bearing on the mortgage sums i'm doing?

 

On the other hand, you can currently get 5 year fixed rate money at well under 2%. 

[Nick]

22 minutes ago, Ferdinand said:

 

On the other hand, you can currently get 5 year fixed rate money at well under 2%. 

 

Would that apply to something like a self-build mortgage though?

[Ferdinand]

1 minute ago, Nick said:

 

Would that apply to something like a self-build mortgage though?

 

You won't know what you can get until you ask.

 

[Nick]

6 minutes ago, Ferdinand said:

 

You won't know what you can get until you ask.

 

 

I've asked and can't get anything less than 4% with a 50% LTV ratio and a literal 100% perfect credit rating. That's why I'm querying it...

[Ferdinand]

1 minute ago, Nick said:

 

I've asked and can't get anything less than 4% with a 50% LTV ratio and a literal 100% perfect credit rating. That's why I'm querying it...

 

Assuming you have done the broker breadth of market thing, then that would perhaps be an ali-shuffle and get the lower money on extending or remortgaging on an existing house to finance, if possible.

 

[Mr Punter]

3 hours ago, bpk101 said:

 

I'm just putting some slightly more accurate figures through this formula you kindly offered... 

 

Our joint income is actually £295k when i add in average annual bonuses over the last few years. I believe these are included as part of your salary when applying for a mortgage? If i remember correctly they were when we applied for our first mortgage.

 

We have equity of £60k and savings of £50k.

 

So i'm arriving at a maximum mortgage of £885k (3 x joint income) plus equity is £945k

Divided by 3 gives us a land budget of £315k (if we add cash savings to the land budget we get to £365k)

That leaves £580k divide by £2000 (i'm being slightly more generous with the cost per sqm here) giving us a potential house size of 290 sqm

 

Is this correct? Another way of calculating it might be this although i get a different outcome...

 

£885k (3 x joint income) plus equity and savings = £995k

Divided by 3 gives us a land budget of £331k

Leaving £664k divided by £2000 = 332 sqm

 

Also, will the approx. £50k fees come on top of this or are they included in the build cost formula?

 

Thanks.

 

 

OK thanks for the figures.  For your income, this will need to be reflected on your tax returns for the last 3 years.

 

For the sake of this, assume you have a total of £1M.  You could look at sites on the market at between £300k and £600k.  Rightmove has these withing 40 miles of Greater London:

https://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION^87490&maxPrice=600000&minPrice=300000&radius=40.0&propertyTypes=land&primaryDisplayPropertyType=land&includeSSTC=false&mustHave=&dontShow=sharedOwnership&furnishTypes=&keywords=

 

You could refine the search with keywords, but it will give you and idea of what is available.

 

I doubt you will find any bargains on Rightmove but is is worth looking at what looks OK, just to get your eye in.

 

Existing houses to replace are also an option.  You can often double the size with the replacement.

 

As you have the income and the energy, you may be better off doing this now rather than waiting five years.  Life is short.

 

 

[Alexphd1]

Personally I would start searching for ground and get the finance up to £400k in place to move quick if you come across something. Some people spend years looking for ground. I would try and refinance existing house for this and stay away from selfbuild mortgages.

[bpk101]

20 hours ago, Alexphd1 said:

I would try and refinance existing house

 

Saving anywhere near 400k in time to 'move quickly' would be near impossible. Even over 3 years it would mean saving somewhere in the region of 10k a month! Not likely with a London mortgage and nursery fees.

 

What do you mean by 'refinance the existing house' and what would that process look like in terms of raising capital to buy land?

 

Whilst our income is good and we've added value to our current home, large sums of cash (apart from 50k savings) is not readily available.

 

Thanks 

Edited September 21, 2020 by bpk101

[AliG]

Often when trying to make a decision having too many possibilities makes it more difficult.

 

You need to narrow down what you are looking for.

 

I think a way to simplify your thought process is to work back from a finished house.

 

For example assuming that you are looking at around a 300 square metre house, what would that cost in the areas you are looking at. People are finding that often a main contractor built house plus plot comes in at around the same cost as the value of the finished house, but you get the house that you want. It is at least a good place to start.

 

Now in much of the south east a 300sq metre houses is going to cost you more than £5000 a square metre, so over £1.5m. This is above your budget. You can see this from the plots found by @Mr Punter which are often £600,000 or more. So if you want this size of house you will likely have to limit yourself to places where house prices are in the £4000 a square metre range.

 

I really would start with, do you want to live in one of these places. There is a big difference between living in a small town/village or the countryside and London. Having lived in town all my life, I cannot imagine living in the countryside, some people on the other hand are in love with the idea.

 

Most people start their search for a house with where they would like to live. Do you want space or to be near shops. How easy is it to visit family. Do you have kids, where is the local school and is it good etc. No point building your dream house if you don't like living there.

 

Then there is what do you want from a plot - south facing garden, big garage and driveway, not being overlooked.

 

Once you have a plot that you like there is a good chance that you can design a house on it that makes sense. There simply aren't that many plots so they tend to be the constraining factor.

 

If you figure this out you can start to look for a plot and what it might cost. Then you can start to budget for the build.

 

Your age does comes into it a little bit, in that if you are planning to build in 5 years you will be pushing 50. Banks will likely limit you to a 20 year mortgage. Also, and I just had this conversation with my best friend, maybe taking out the largest mortgage you can as you approach 50 is not a good idea. Maybe a slightly smaller house and retiring earlier would be a better plan.