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Self Build Bridging Loan


Goggs
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We own our current house which is valued at 600k and we have a 100k mortgage. We plan to self build and have the land. Our budget is 450k. Our options as I see it are; sell the house and live on site in a residential "lodge" or rent a house nearby (rental market is not good in the area). The other option is to take a bridging loan for the 9 month build time and pay it off when we sell our current house. I want to be mortgage free at the end of the build.

 

Has anybody got any experience of bridging loan agents/banks that they can share?

Edited by Goggs
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"The other option is to take a bridging loan for the 9 month build time"  - I wouldn't make any plans that depend on that remaining at 9 months, unless you are happy to cut scope and quality, or can let it  go over budget. (The old project management triangle: controlling cost vs time vs quality - pick any two)

 

Throwing in some other options: 

- speak to a mortgage broker and your current mortgage provider and see if they can provide the liquidity needed (with "early repayment" terms so you can clear it when selling)

- speak to self-build mortgage providers and see if they can provide anything secured on the land + stage payments (maybe with a second charge against the existing house deeds?) - again with option of early repayment.

 

When we moved house we broke the chain (bought then eventually sold) and went for the second mortgage approach rather than bridging loan as it worked out much cheaper.

 

I think a lot of funding questions come down to variables not mentioned: how much capital ( savings  / deposit) you have to start the project with, and what your income stream looks like.

 

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Thanks for your comments. Spoke to Buildstore about a mortgage but because I am self employed and in my 60's, it was getting very complicated. Bridging loan seemed the way to go. However, I can see us having to sell up first. The plus point is that we can do a lot of the ground works and foundations our selves, SIPS house so goes up pretty quick. 

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  • 1 month later...
On 09/12/2021 at 09:46, Goggs said:

We own our current house which is valued at 600k and we have a 100k mortgage. We plan to self build and have the land. Our budget is 450k. Our options as I see it are; sell the house and live on site in a residential "lodge" or rent a house nearby (rental market is not good in the area). The other option is to take a bridging loan for the 9 month build time and pay it off when we sell our current house. I want to be mortgage free at the end of the build.

 

Has anybody got any experience of bridging loan agents/banks that they can share?

Try https://www.mayflowermortgage.co.uk I have no affiliation but they have an excellent track record

 

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I’d second Mayflower. They were very helpful when we chatted to them. We’re actually in the process of finalising a bridging loan as it worked out the simplest, quickest and while not the cheapest it wasn’t far off alternative finance options given our (pessimistic) timelines. (We’re also in the slightly unusual position that we’ve already self financed/completed 70% so a lot of the harder stuff is already done). We actually have ended up using propp.io (we’d started talking to them before we found Mayflower) and they’ve been great as well. 
 

Do bare in mind with a regulated bridging loan you’ve got a 12-month limit until you have to redeem so you have to be very confident in your timings. 

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