Ecology mortgage, contingency %?

[SarahG]

Just thinking about my self build mortgage, whilst I wait for BR drawings to be completed and interest rates to go up

 

I will probably go ecology as they seem pretty good, just wondered if others that have used them what did you need to provide in terms of contingency. I seem to read differing opinions from between 8-20% of the build cost, which is quite a big variation, 20% seems pretty huge! Just wondered if anyone wanted to share their experience?

 

We are very low risk as our build is very simple and the amount we want to borrow is about 50% of the cost of the plot on its own. We are both in long term employment, however we will most likely need to borrow the maximum we can in order to afford the build. We already own the plot and have savings of about 10-15% to put towards the build.

[Wumpus]

Just working an application with Ecology right now, agreed in principle. First of all, I think they are great - very helpful and easy to work with.

 

To your question, when they set up the initial phone discussion they ask for:

• Approx. Building costs including 10% contingency.
• If New/Self Build, Predicted SAP Rating completed on plans and drawings
• If Renovation, current Energy Performance Certificate for property
• Confirmation of Own Funds
• Estimated values of the property in present condition & on completion. This could be your own estimate or a professional opinion if you have one already. 
   

…or at least that’s what they asked us.

 

hope it goes well for you.

[SarahG]

Thanks @Wumpusthat is very helpful. I will update my spreadsheet to 10% for now.

 

How much detail did you need to give for approx building costs? Did you need to supply a full builders quote? We plan to use estimators online to give us an idea of a baseline cost, before using that to get quotes from builders. I wonder if I could get an AIP with just the estimators online quote, although it's probably sensible to speak to a few of our perspective builders in case the costs are way off for our area.

[Wumpus]

23 minutes ago, SarahG said:

Thanks @Wumpusthat is very helpful. I will update my spreadsheet to 10% for now.

 

How much detail did you need to give for approx building costs? Did you need to supply a full builders quote? We plan to use estimators online to give us an idea of a baseline cost, before using that to get quotes from builders. I wonder if I could get an AIP with just the estimators online quote, although it's probably sensible to speak to a few of our perspective builders in case the costs are way off for our area.

I provided our contract budget because we are using a single contractor. I imagine any QS estimate would be acceptable.

 

they are really helpful, so just ask them?

[deancatherine09]

12 hours ago, SarahG said:

Thanks @Wumpusthat is very helpful. I will update my spreadsheet to 10% for now.

 

How much detail did you need to give for approx building costs? Did you need to supply a full builders quote? We plan to use estimators online to give us an idea of a baseline cost, before using that to get quotes from builders. I wonder if I could get an AIP with just the estimators online quote, although it's probably sensible to speak to a few of our perspective builders in case the costs are way off for our area.

Ecology were fine with Estimators Online quote from us for our build 🙂

[SarahG]

Thanks, that's good to know. I have called them a few times with various questions so sure I will be calling them again soon. I was just wondering what other people's experiences were really. q 

[Seren161]

We used our builders quote because we were going with a single contractor.. In reality there is a considerable degree uncertainty regardless of which figures you go with ( our builders quote increased ten percent between acceptance and build commencement as so much time had elapsed and wood, concrete and steel prices were at their peak then) 

We are both self employed so ours was a little tricky as lenders prefer the security of the employed so we tendered out to a few builders for turnkey build, factored in our 15 per cent contingency( most of which disappeared at build start ..see 👆 ) and looked to see if what we wanted to build was achievable…

There can be an element of nip and tuck of your spec to achieve the build cost that is acceptable to the lender within your max borrowing ..if the alternative is not being able to obtain a mortgage as you have 18-24 months to complete build… In our case with a different lender ( Newcastle) we managed to get a mortgage ( we had tried a highly recommended self build broker called Mayflower and he had told us that it was not simply possible in our case so we went to Buildstore )  ….we would have preferred to borrow a bit more but at the time ( both businesses recovering from covid, twitchy lenders etc)  we took what we could get..Now in reality, this was all early last year, build commenced Nov 21 and we are 3 months away from build completion( barring any major disasters .) and while our original spec did not include things like solar panels, ASHP, battery storage, triple glazing and MVHR.. we have been able to include this items. 
I think if we had left it till we were able to save everything we needed.. we would still be waiting to start especially with the current inflation situation and rates … the other really important factor for us was finding a building contractor whom we had a good relationship with so that we could add these on affordably if our savings allowed etc 

[Matt540]

I wrote out my own budget sheet on excel showing as much detail as i could, some lines i referenced quotes i had received and others i just entered a value i had estimated myself through online pricing and my own calculations. i then just added a line for 10% contingency and this all went through with no issues.

 

as long as you are realistic i don't think they will have any objections

[northdownbuilder]

On 26/08/2022 at 15:23, Seren161 said:

We used our builders quote because we were going with a single contractor.. In reality there is a considerable degree uncertainty regardless of which figures you go with ( our builders quote increased ten percent between acceptance and build commencement as so much time had elapsed and wood, concrete and steel prices were at their peak then) 

We are both self employed so ours was a little tricky as lenders prefer the security of the employed so we tendered out to a few builders for turnkey build, factored in our 15 per cent contingency( most of which disappeared at build start ..see 👆 ) and looked to see if what we wanted to build was achievable…

There can be an element of nip and tuck of your spec to achieve the build cost that is acceptable to the lender within your max borrowing ..if the alternative is not being able to obtain a mortgage as you have 18-24 months to complete build… In our case with a different lender ( Newcastle) we managed to get a mortgage ( we had tried a highly recommended self build broker called Mayflower and he had told us that it was not simply possible in our case so we went to Buildstore )  ….we would have preferred to borrow a bit more but at the time ( both businesses recovering from covid, twitchy lenders etc)  we took what we could get..Now in reality, this was all early last year, build commenced Nov 21 and we are 3 months away from build completion( barring any major disasters .) and while our original spec did not include things like solar panels, ASHP, battery storage, triple glazing and MVHR.. we have been able to include this items. 
I think if we had left it till we were able to save everything we needed.. we would still be waiting to start especially with the current inflation situation and rates … the other really important factor for us was finding a building contractor whom we had a good relationship with so that we could add these on affordably if our savings allowed etc 

Say you were in the opposite boat and you managed to complete your build, save for say completing a garage due to lack of funds and build cost increases etc. Would they hold your final retention even if you have completion certificate, as the property would have been originally valued with a garage? We find ourselves in this situation - however house prices have increased in the area such that the final value well exceeds the original ‘anticipated’ value the bank provided. 

[Conor]

33 minutes ago, northdownbuilder said:

Say you were in the opposite boat and you managed to complete your build, save for say completing a garage due to lack of funds and build cost increases etc. Would they hold your final retention even if you have completion certificate, as the property would have been originally valued with a garage? We find ourselves in this situation - however house prices have increased in the area such that the final value well exceeds the original ‘anticipated’ value the bank provided. 

It's entirely down to the surveyors valuation. We reached our full value about half way through the build (and therefore could draw down the full amount) due to the increase in property prices locally. I'd reccomemded arranging the valuation asap.

 

However, if you've completed, surely you'd be looking for a normal residential mortgage at this point and settling up with Ecology, rather than drawing down more funds?