Hi – My OH and I are looking to pursue a self-build project and i'm at a stage where i need a bit of advice on mortgage options to fund it. Hope you can help!

 

After a bit of research and after chatting with a number of architects, our preferred route would be to buy a run down house, demolish it and then re-build on the plot. To fund this i think we'll be looking at a second mortgage (we have a mortgage on the house we currently live in) to cover any shortfall in savings, which will be sizable.

 

Would an appropriate sequence be....

 

1. Get a second mortgage to cover the cost of the purchase of the run-down but habitable house (obviously telling the lender our plans).

2. Once purchased, sell our current house and move into the house we plan to demolish.

3. Apply for a further mortgage to fund the self-build.

 

Or should we be looking for a single mortgage that covers both the house/land purchase and the self-build (if such a thing exists in a buy-to-demolish scenario)?

 

Furthermore, the mortgage we currently have is a fixed 5 year part capital, part interest mortgage and we have 4 years left in it, will this affect our chances of getting a second mortgage i.e. do we have to wait for the 4 years to finish?

 

Lastly, do you know of any lenders i could approach in the first instance to find out our borrowing capacity?

 

Thanks

I can't see many (if any) mortgage providers giving you funds to buy a house you plan to immediately demolish. If you walk away at that point, they'd own an asset worth less than they've lent. 

 

In your "sequence of events" above, where are you going to live once you've demolished the run-down house?

 

Could you remortgage your current home to release the funds to purchase the run-down house? If not, you might need to sell your current home  first and then do whatever you were going to do once the run-down house is demolished.

Edited October 8, 20206 yr by AliMcLeod