Newbie Self-Builder - DIP / Fees / Costs Etc

[delta9]

Hi there, looking to self-build my first house to live in and I could do with some info from someone who has gone through the process before.

 

I'm at the stage where the broker has calculated how much I can borrow to build with an estimated depost of 10% - 20 %.

Nothing has been paid yet to the broker/lender and no credit search has been carried out (AFAIK).

 

First question is the Decision in Principle (DIP).

My confusion is normally on a standard residential mortgage, the lender will give you the DIP beforehand, so then you approach the estate agents (they ask for a copy of DIP), you view/submit offers and that gets the ball rolling... Then you starting chucking money into it (broker fees/deposit/solicitor fees /lender / surveys fees etc etc etc)

 

But now on this self-build mortgage, I do not have a DIP beforehand, the broker has simply told me to find a plot (with outline or full PP) and let them know when I do so.

So what happens when I find a plot from either an estate agent or the landowner, do I submit an offer on the plot and then go back to lender if estate agent accepts offer? (I would then have my plot cost). Is it after this stage I would get a DIP or rejection?

 

Final question would be on the fees, what fees can I expect to be paying?

I know the broker fee is about £1000

Lender's fee is currently unknown, but I assume this is probably another £1000

Land survey and other survey fees etc are these done before the lender will lend?

Solicitor needed??? As you would with a normal mortgage this would be another £1000, but not sure if needed

 

My self-build project is on a budget (under 150k for plot and build) so at this early stage I am trying to work out exactly how much cash is needed,

Hope someone can help, at the moment everything is a bit vague on the actual 'Upfront' costings so thought I'd ask on here, appreciate any advice, thank you

 

 

 

Edited July 1, 2021 by delta9

[nod]

On top of all your lender fees 

You will have to allow for for all your 

Building surveys 

bats birds Eco tree Architects etc 

150k for the build would be optimistic 

Including the plot? Typo perhaps 

[delta9]

9 minutes ago, nod said:

On top of all your lender fees 

You will have to allow for for all your 

Building surveys 

bats birds Eco tree Architects etc 

150k for the build would be optimistic 

Including the plot? Typo perhaps 

 

Ok thanks for the post

 

I am talking about pre-application costs (or my costs) before securing finance. I assume these surveys would be done pre-planning stage after plot purchase (and funded by the lender and not me).

 

No not a typo! Where we live plots can be bought fairly cheap £10k - £40k will get a decent sized one enough for say 3 bed detached house or dormer.

150k for the land and building actually over estimated!

 

 

 

[Ronan 1]

What part of the world are you in?, that'll make a big difference regards budget but as per Nod 150k for all in is  very very tight and unless you plan on something very small and on doing all or alot of the work yourself is probably unachievable 

[jamieled]

 In terms of upfront cash required it will be highly dependent on the specific plot as it will dictate any survey requirements. The answer is almost 'how long is a bit of string'. If you polled everyone on here you'd get people who spent sub £5k at this stage and others who spent tens of thousands.

 

That probably seems an unhelpful answer, so perhaps a way to think about it is to list out the very basic requirements (planning app fee, building warrant costs, fees for an architectural technician for your drawings). Get these costs off the LA website and ask an AT for a quote or look at some on here. That gives you something to work with assuming you find a 'normal' or straightforward plot. Then if you find a plot that looks like it might have additional requirements such as ecology survey, flood risk or something else you'll know you need more.

 

You'll want a solicitor for the land purchase to check the title and for any searches. I'd have thought the lenders would require one to ensure their money is purchasing a legit piece of land.

 

 

[Redoctober]

33 minutes ago, delta9 said:

No not a typo! Where we live plots can be bought fairly cheap £10k - £40k will get a decent sized one enough for say 3 bed detached house or dormer.

150k for the land and building actually over estimated!

 

 

WOW - do these plots have planning as well ? What about services? Would love to see your costings etc for a 3 bed detached house to be built for around the £120k mark.

 

 

[Adsibob]

2 hours ago, delta9 said:

I know the broker fee is about £1000

You need to find a cheaper broker! Mine charges £260 per transaction, and only after you have an actual mortgage offer. Pm me if you want the details.

[Bonner]

8 hours ago, delta9 said:

No not a typo! Where we live plots can be bought fairly cheap £10k - £40k will get a decent sized one enough for say 3 bed detached house or dormer.

150k for the land and building actually over estimated!

 

Don’t be put off by any apparent scepticism, this is what a normal house should cost! Self builders tend to focus on larger, high spec homes which cost much more. Developers will be spending this kind of money on houses they sell for £250k+ but they have economies of scale. Watch out for utility connection costs but as you say, this will be funded by the mortgage ...

To answer your specific questions, you can make any offer you want (subject to contract) then sort out the mortgage. Bear in mind, in a competitive market, sellers will prefer cash offers. Survey costs depend on the lender and your attitude to risk.

[nod]

10 hours ago, delta9 said:

 

Ok thanks for the post

 

I am talking about pre-application costs (or my costs) before securing finance. I assume these surveys would be done pre-planning stage after plot purchase (and funded by the lender and not me).

 

No not a typo! Where we live plots can be bought fairly cheap £10k - £40k will get a decent sized one enough for say 3 bed detached house or dormer.

150k for the land and building actually over estimated!

I’m the  first to say that a house can be built cheaply Whilst we had a high spec we came in at 815 m2 

Around 200k to build a high spec house But did most of the work ourselves 

We still had to buy the plot also 

Your fights for purchasing the plot are unrealistic It would have to be in the middle of nowhere to get one anywhere near that Which would push your build costs up 
The problem you have is

weather you are building a 3 bed or a six bed Utility legal and survey costs are the same 

Your location would make things clearer 

10 hours ago, delta9 said:

 

 

 

[ToughButterCup]

Hi!, welcome.

 

You have a list of questions above, each of which could be answered by a service provider - and better still two or three service providers . We can just give you an indication. Its important to draw your attention to the fact that we aren't experts at anything much - except a few members and it doesn't take long to work out who they are and what their specialisms are. But some members sound like   experts and aren't.

You need to go through the process of Due Diligence (a self build is an business decision just like any other)  with every single bit of your build.

Here, you will always get a sympathetic ear about self-building, especially from those of us who are near the end or have completed our selfbuilds. Its very hard, nervy work. We know from bitter experience and I for one am very grateful to everyone who has supported  me. Very grateful indeed.  Shame I can't give back directly to those who helped. So instead, we help newbies like you.

Good luck.

Ian

[delta9]

Hi all, thanks for the input.

 

My post was specifically aimed at the Self-Build mortgage costs, mainly the upfront costs to secure a plot ready for further funding towards the build.

 

Yeah I've tried asking for transparency in regards of these costings, but at the moment it is unknown!

 

Thanks

 

 

[Ronan 1]

12 minutes ago, delta9 said:

 

My post was specifically aimed at the Self-Build mortgage costs, mainly the upfront costs to secure a plot ready for further funding towards the build.

Hi Delta,

 

Unfortunately egards the mortgage specifically it's your broker who could best advise as there is too many unknowns for anyone here to advise accurately but your broker should be able to give you an idea of product your likely to be offered and their costs along with his own and may even be able to recommend a solicitor (if you don't have one and of his costs)

 

Also again regards further upfront costs for the site to get further funding this can vary MASSIVELY from a few thousand to tens of thousands and is really dependant on the site you choose and the conditions that come with it, but as a rule the bank will want signed off planning permission and from building control, plus detailed costs for your self build that tallies with your loan amount request and the cash in your bank.

 

Sorry I can't be more help but if you want to nail down costs you really need to nail down a site first 

[Jilly]

I understand your conundrum, I also have a small budget at the moment, but am optimistic for the future! To save money and minimise the amount you want to borrow, perhaps start with a small place but have plans to extend when finances allow? It's much easier to borrow on an existing building. Also, living on site in a static is the classic self builder way to save money, slow self build is cheaper so long as rent isn't swallowing up your cash. Once you have broken ground your planning permission is usually locked in til you are completed so you can steady the ship. 

 

It can be stressful journey with a stack of unknowns so it's important to control your finances.

[ToughButterCup]

Tight financial control means restful sleep. 

[delta9]

Hi, thanks for the replies!

 

So from what I can gather, it would be at my expense (upfront costs) to conduct all these surveys on the plot before the lender will say yes, i.e. site surveys, ecological survey, flood risks, soil condition reports etc etc

Further to this I assume they would require full planning permission and building regs and finally there is also a complete breakdown of the labour costs and materials.

 

I had initially thought that the lender would be paying for these after just securing a plot with just outline planning permission.

But it seems now that the lender will just lend on just the labour and materials, i.e. 1st stage lending will commence on digging out foundations.

 

Have I got this correct?

 

Assuming so, financially this does not concern me and I would be willing to pay these upfront costs, however the worry is I spend all this preliminary costs on a plot (to satisfy the lender) and the time it would take, surely this would take months to complete and I can't see the estate agent or land owner waiting for this duration and then there is the other risk that the land owner decides to sell to a cash buyer, therefore I would be at a loss financially and plot wise.

 

Thanks

 

 

[Redoctober]

57 minutes ago, delta9 said:

Assuming so, financially this does not concern me and I would be willing to pay these upfront costs, however the worry is I spend all this preliminary costs on a plot (to satisfy the lender) and the time it would take, surely this would take months to complete and I can't see the estate agent or land owner waiting for this duration and then there is the other risk that the land owner decides to sell to a cash buyer, therefore I would be at a loss financially and plot wise.

 

Could you not approach the land owner with an offer that is "conditional" upon you receiving all the information you require. Thereby effectively "ring fencing" the land until you are either ready to proceed or pull out depending upon your findings?

 

In addition, if the plot is well sought after, you may wish to agree some sort of "deposit" to secure it during the research period?

[delta9]

Hi,

Yeah that sounds like something to look into, there must be a way to do it.

 

As I can't really afford to lose deposit money, I thought maybe about offering over the asking price rather than a deposit.

 

Both parties then benefit if lender agrees to lend - The Landowner owner will get more profit and I get my plot.

But its still a risk to me losing money on surveys etc if the Landowner does not honor the deal.

 

Thanks for the help

 

 

Edited July 3, 2021 by delta9

[Adsibob]

@delta9 I really think you should:

1) find a good mortgage broker with experience of these transactions; and

2) speak to the specialist lenders that focus on the sector of the market.

Both should give you useful info for free.

[Adsibob]

Just now, Adsibob said:

@delta9 I really think you should:

1) find a good mortgage broker with experience of these transactions; and

2) speak to the specialist lenders that focus on this sector of the market.

Both should give you useful info for free.