Evening all.

Our build has about 4 months left to complete and funds are now getting low as expected.

We were always going to be approx 60k short which we knew from the start.

What is the most efficient way to borrow this sum of money?

We will be paying it off when we remortgage but obviously can’t do this until build is complete from my understanding.

 

Easiest option looks to be a bridging loan or maybe try and spread it across credit cards but this looks like it could be messy?

 

Many thanks for any info

Can you extend your current self build mortgage? If you have one that is. 

Hello Dan1983.

 

Hope this helps a bit and gives you some food for thought.

 

Self builds tend to be messy by nature, you have a lot of stuff that is kind of finished but not quite! It all comes together in the end though.

 

One option is to get your build valued by an understanding surveyor. But for them to do this they need to have some solid things to point to / reference. For example; have all the founds and walls been signed off by say BC or the SE. Is it really wind and water tight, are the drains in tested and signed off. What materials are on site, who owns them and will say a pile of windows / kitchen units actually fit in the holes / space? If the first fix electric complete.. get a report from the spark ( can just be a print out / log of their test results on the cables) that the fix fix testing has been carried out and so on.

 

It may be that it's worth getting parts of the build put to bed and these can be valued along with any increase in the plot value. This may allow you to convince a lender to advance the rest of the funds without resorting to credit cards?

 

It's worth a look anyway as it forces to to take a good look at where you are, what you have to do and how long it is going to take to finish. it makes you break down the rest of the work into steps.. you can see the wood for the trees and this can often lift any flagging spirits you may have.

 

 

I've borrowed a (hopefully!) final instalment from a family member. We've drawn up a DIY contract and I'm giving them 3%, we are both happy with this as it was quick and easy to do and they get a better interest rate than the bank is offering on savings. 

I was going to do that but parents would have to move investments which would be a pain.

A 60k bridge loan will work out about £290 PM so may be the easiest method.

 

Completion is March but not sure at what point I can switch back to a standard mortgage?

Was only hoping to need a loan for 3 months but depends on how long it takes to sort a new mortgage 

Edited November 14, 20214 yr by Dan1983

get as low as possible interest rates thats the best i can advise every % counts

On 14/11/2021 at 00:11, Dan1983 said:

 

A 60k bridge loan will work out about £290 PM so may be the easiest method.

I’ma similar situation. What  bridging loan provider have you found and what rates are you getting? I put £20k on credit cards fairly easily, £10k on each. But there is a limit to how much you can put on cards before your credit profile starts to implode.

Was a no go as bridge loan required me to pay off my existing mortgage so would work out costly.

Gone for a 50k bank loan and will top the rest up with credit card until we can re mortgage 

12 minutes ago, Dan1983 said:

Was a no go as bridge loan required me to pay off my existing mortgage so would work out costly.

Gone for a 50k bank loan and will top the rest up with credit card until we can re mortgage 

 

Just out of interest how have you managed a 50k bank loan?  I thought max was 25k?

For the older amongst us (in this context 55 or older) if you have a private pension, you could put it into a drawdown SIPP and take out the 25% tax free amount in one lump.  That is what I did. But do make sure if you do that, you don't leave yourself short of pension provision.

1 hour ago, Dan1983 said:

Was a no go as bridge loan required me to pay off my existing mortgage so would work out costly.

Gone for a 50k bank loan and will top the rest up with credit card until we can re mortgage 

Which bank and what rate did they give you?

1 hour ago, ProDave said:

For the older amongst us (in this context 55 or older) if you have a private pension, you could put it into a drawdown SIPP and take out the 25% tax free amount in one lump.  That is what I did. But do make sure if you do that, you don't leave yourself short of pension provision.

 

 

Also once HMRC flags a person as being in pension draw down, further pension contributions during later employment are capped at £4k per year.

Think it just goes off your salary?

Most lenders offered 50k as a max, I only need it for a 2-3 months 

26 minutes ago, epsilonGreedy said:

 

Also once HMRC flags a person as being in pension draw down, further pension contributions during later employment are capped at £4k per year.

Yes valid point.  But I did hear if you only take the 25% tax free as one lump, and not a penny more and don't draw down any of the remaining 75% that does not apply.  But check if it applies to you or affects you first.

It all depends whether removal of funds triggers the Money Purchase Annual Allowance (MPAA). It can be complicated but if you're lucky enough to have a defined benefit scheme you're fine.

Otherwise you could use the small pots payments which allows 3 pots of up to £10 000 to be taken without triggering MPAA.

As ever with Pensions get advice first.

1 hour ago, Dan1983 said:

Think it just goes off your salary?

Most lenders offered 50k as a max, I only need it for a 2-3 months 

Would really appreciate it if you could share the name of the bank and the rate you are being offered, as the banks I have accounts with (Barclays and Santander) don't seem to offer more than £25k.

I think all the main lenders would do 50k, believe this is the max most will lend as a normal loan.

i think it was with HSBC, not sure on rate will update when I take the loan out in a couple of weeks.

 

On 01/01/2022 at 04:47, Adsibob said:

I’ma similar situation. What  bridging loan provider have you found and what rates are you getting? I put £20k on credit cards fairly easily, £10k on each. But there is a limit to how much you can put on cards before your credit profile starts to implode.

 

I know you don't really know until you apply, but  are there particular credits cards (with 0% interest for a few months) likely to have a  limit around 10k?

 

44 minutes ago, cwr said:

 

I know you don't really know until you apply, but  are there particular credits cards (with 0% interest for a few months) likely to have a  limit around 10k?

 

I have two at the moment. A Virgin Money Card that gave me £12k interest free spending for 18 months and a TSB card which gave me slightly less for slightly longer. Check out the price comparison tables on MSE.

Edited January 3, 20224 yr by Adsibob

9 hours ago, cwr said:

 

I know you don't really know until you apply, but  are there particular credits cards (with 0% interest for a few months) likely to have a  limit around 10k?

 

MSE maintain a list of current 0% card deals available at any time here https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards/

If a card company lends money to some people at 0%, must mean I am paying somewhere down the line.

1 minute ago, SteamyTea said:

If a card company lends money to some people at 0%, must mean I am paying somewhere down the line.

There is usually a "fee" I think on my last ones of 2.8% for a credit transfer to the 0% so you are not really getting free interest, but are paying in round figures 1.5%pa for the privilege of borrowing some money, which in todays low interest regime I think is a fair rate.

 

They of course hope you will carry on using the card and pay interest on it after the 0% rate finishes. I guess not all people that take a new card just for the interest fee period lock it away in a drawer never to be used again until it expires.

 

You could say the same about all credit cards.  I use them a lot, and always pay the full amount each month so never pay interest, it is just a convenient way to pay and easier to keep track of vs using a debit card.

5 minutes ago, ProDave said:

privilege of borrowing some money

Since I payed off my mortgage 23 years ago, I have not borrowed money.

Can't say I have saved enough though.

Can I get a 0% card and buy some crypto, the price is down today.

 

Edited January 3, 20224 yr by SteamyTea

1 hour ago, ProDave said:

pay interest on it after the 0% rate finishes

Tried this once, and got hit at the end of the 12 months as they don't warn you it is coming to an end.

Perhaps some are less cynical and the aim is get a new /keep a customer at the end: it is certainly very difficult to close a credit card account, as there is always some reason why thy can't.

43 minutes ago, saveasteading said:

Tried this once, and got hit at the end of the 12 months as they don't warn you it is coming to an end.

Perhaps some are less cynical and the aim is get a new /keep a customer at the end: it is certainly very difficult to close a credit card account, as there is always some reason why thy can't.

You need the discipline to have the end date on your calendar and ensure it is all paid off before the end of the interest free period.

 

I have never closed one, just stopped using it and at the end of the period when the card would need replacing they just quiely let it lapse without renewing the card.