Self build funding - what would you do differently!

[Harmony]

We’re thinking through various options to fund our self build next year…. 

 

Just wondering what others have done and what would you do differently re funding - self build mortgage, bridging loan, remortgage???

 

Our circumstances are….

• A plot we own outright with a property on which will be demolished 
• Current home has a mortgage of £40k with 10yrs left 
• Current home value of approx £250k
• Savings £50k
• Current home will be sold to ‘pay’ for the self build 
• Budget for self build £250-300k
• Time scale for self build completion 3-5mths
• Not wanting to rent as mortgage payments are low
• Not wanting to live on site as we live close to the plot.

 

[Big Jimbo]

So you basically need £300k to build ? Keeping the £50k in you pocket for overspends ? Where are you getting the 3 to 5 months timescale to knock and build? Regardless of where you get the money from, say you end up spending the £350k for the knock and build. You come to sell your house and find out that you can only get £200k for it instead of the anticipated £250k. After paying your old mortgage off, you will need a new mortgage of £190k. Will you have the income to borrow this ? Lots to consider.

[ProDave]

In the present climate sell the house and live on site, it may not be what you want to do, but you don't want to be stuck like we were with a part build house (basic shell) all money spent, and the old house would not sell in a dead housing market, not unless I gave away a 5 bedroom house for less money than the construction cost of the new 3 bedroom house (i.e pay to downsize)

[Thorfun]

55 minutes ago, Harmony said:

Time scale for self build completion 3-5mths

😂

 

30 minutes ago, ProDave said:

In the present climate sell the house and live on site, it may not be what you want to do, but you don't want to be stuck like we were with a part build house (basic shell) all money spent, and the old house would not sell in a dead housing market, not unless I gave away a 5 bedroom house for less money than the construction cost of the new 3 bedroom house (i.e pay to downsize)

+1

[nod]

The quicker you build the more it will cost

3-5 months isn’t long enough

Trades are sill busy You May be waiting a month between trades 

[saveasteading]

Welcome.

 

Circumstances you haven't mentioned are

your knowkedge and experience in construction and in management.

 

How confident are you in the budget?

 

Planning permission status.

 

The construction process. Consultants/ main contractor / diy?

 

[Dave Jones]

you need the cash in the bank. anything else will cost you.

 

If you think it will be done in 3 months your in fantasy land. Lead time of lintels in 4 weeks for us.

 

12 months and you will be very lucky.

Edited September 3, 2023 by Dave Jones

[Kelvin]

Our windows were on a 12 week lead time alone. 
 

There have been points where I would have rather not done it all. Instead would have bought a wee cottage, bit of land, workshop and banked the rest. As it is we are two years in from first stepping into the land to now. We are 6 months into our build with maybe 4 months to go with a fair wind. It’s all been funded by the sale of our previous house. Neither of us work so getting a mortgage is out and we won’t use any of our savings to finish it.
 

Building costs more than you think. People tend to overestimate how far your money goes and underestimate how much things cost. There are many new posts on here from well meaning self-builders starting out on the journey thinking that they can build for a fraction of what the reality is. Ultimately it will come down to how much you can do yourself and doing it yourself will likely take longer than getting trades in. 

[twice round the block]

Do you have planning permission on the plot yet?

The time it takes to do the demo, clear the site, get the drainage and other services in including water harvesting now, set out the site, excavate footings, get footings and slab in there goes a large chunk of budget and the first 6 weeks, and that's if your good.

 

Take your rose tinted glasses off and take a reality check. 

Not sure what your day job's are but it's got nothing to do with the construction industry. 

 

Sorry if this reply sounds harsh but I done my first self build in 1984, spent years in the building game, just about to do build number 4 for a family member, plus all the other bit's I've done for private clients in between. 

Edited September 3, 2023 by twice round the block

[Dave Jones]

not to mention services connection. leccy meter is 3 months and counting.

[Kelvin]

30 minutes ago, Dave Jones said:

not to mention services connection. leccy meter is 3 months and counting.

Good point. It took me 8 months from beginning to end from the initial quote from the DNO to a metered supply 

[Canski]

54 minutes ago, Kelvin said:

Good point. It took me 8 months from beginning to end from the initial quote from the DNO to a metered supply 

It took me nearly that long to get a quote from the DNO. 
 

[saveasteading]

I normally say to a potential client at first contact that they can be in the building in a year. That sometimes includes planning if they allow full design to commence.

The reaction was 50/50 seems a long time / that's good.

What to add to that? Time lost through client changes or stipulations.

Can it be done quicker? A little quicker for a large extra cost, because you are giving us risk.

 

Realistically say minimum 18 months construction period unless you are a very experienced construction manager or accept a standard kit building on a perfect site.

 

@Harmony we are all sounding negative, but in your interest. We now need your response to confirm you are listening.

[Conor]

We built in 18months which I think is reasonably good for a self managed build. But the entire process from buying the site, to moving in, took 3.5 years. And we spent way, way more than anticipated. We've just had to take out another £30k loan to do the landscaping and a few finishes.

 

Cash is king, sell up, ring fence your money and get started. If you have £300k, after you fees, design ,demolition, services etc, you will have £250k. Things will cost a lot more than you think, so you should have a build design that will cost £200k to build. That means a max of 150m2, 1.5 story house, with budget/ modest finishes. 

[Dave Jones]

29 minutes ago, Conor said:

We built in 18months which I think is reasonably good for a self managed build. But the entire process from buying the site, to moving in, took 3.5 years. And we spent way, way more than anticipated. We've just had to take out another £30k loan to do the landscaping and a few finishes.

 

Cash is king, sell up, ring fence your money and get started. If you have £300k, after you fees, design ,demolition, services etc, you will have £250k. Things will cost a lot more than you think, so you should have a build design that will cost £200k to build. That means a max of 150m2, 1.5 story house, with budget/ modest finishes. 

 

150m2 for 200k VERY optimistic more like 100m2 and thats still tight.

[nod]

2 hours ago, Conor said:

We built in 18months which I think is reasonably good for a self managed build. But the entire process from buying the site, to moving in, took 3.5 years. And we spent way, way more than anticipated. We've just had to take out another £30k loan to do the landscaping and a few finishes.

 

Cash is king, sell up, ring fence your money and get started. If you have £300k, after you fees, design ,demolition, services etc, you will have £250k. Things will cost a lot more than you think, so you should have a build design that will cost £200k to build. That means a max of 150m2, 1.5 story house, with budget/ modest finishes. 

Spot on Conor 

Most would allow 18 months to two years 

If you get it done quicker It’s a bonus 

Cash is king 

An electrician friend is being paid £45 per hour cards in van provided His hours start when he switches the van on and switches it off 

Very hard to prize him away from his day job 

Cash is king 

[Canski]

On 03/09/2023 at 19:18, nod said:

 

An electrician friend is being paid £45 per hour cards in van provided His hours start when he switches the van on and switches it off 

i would leave it running all night  

 

[nod]

44 minutes ago, Canski said:

 

Yep he’s fell on his feet there 

 

[saveasteading]

@Harmony. Can you give us feedback on the comments please, or there  probably won't be any more?

It's OK to disagree.

[Blooda]

On 03/09/2023 at 14:58, Kelvin said:

with maybe 4 months to go with a fair wind.

 

 

We had 4 months to go for at least 18 months  

 

 

On 03/09/2023 at 15:34, Kelvin said:

Good point. It took me 8 months from beginning to end from the initial quote from the DNO to a metered supply 

 

I think we were just under a year from asking for quote to getting connected.  

 

[Bozza]

So we lived in a house with no mortgage and money in bank.  Bought a plot with a house to be demolished  Funded that purchase by lending on current house.  Knocked down house on plot did all the planning etc and once handed plot over to builder we sold our own house and moved into a rental property. Plot not suitable for caravan.  So we took a hit on renting a tiny flat during build but meant we had minimum self build loan amount.

 

Though numbers are different, your circs are similar to ours.  The best thing we did was to sell our house and move into a rental.   Because it was a clean and straightforward stages/ steps.  we didn’t end up in situation where we owned one house and trying to fund building a second house.  You never know what’s round the corner (in our case pandemic & lockdown).   If we had stayed in original house until new one was built we’d have been in a dire situation.   

 

as far as I can see if you sold your house and paid off mortgage you’d have £210k plus your £50k savings.

 

I cannot see how you could demolish a property and build a house for £260k quickly TBH.  unless you physically do a lot if it yourself and it’s a very small basic spec house.  Or lend more.  
 

if I was in your position right now I’d make sure I’d secured planning permission.  Then establish the full demo and build cost.  If it’s affordable, demo the old property and clear the site.  (we did that ourself at zero cost).

then sell your own house.  You will then have financial clarity and money in the bank.  You can then decide whether you can afford to rent or live on site.  

Your proposed strategy is to sell house only once new build is compete (exactly what we would have wished to do).  That fine if your savings, or access to funds, would be in well in excess of your build cost.  As it’s not, if something goes wrong whether job loss, illness, further economic issues, war, inflation, housing crash, labour shortage, builder problems, pandemic (all these things are not unrealistic) you’d be left potentially in your current house with a half built new house that you can’t finish.  And facing financial ruin.

 

The other option if you insist on keeping your own house would be to build in stages from your savings and release equity from your house.   But even your £50k savings will be exhausted far quicker than you can imagine it a take £20k upwards just to get out of the ground.

don’t give up, but think carefully.  I see a lot of plots being sold with the foundations only having been completed.

 

you’d be able to lend off the owned plot of course - speak to Ecology - but it’s possible the value of the plot would initially reduce because your removing a house from it.  And you’d be hit with high interest rates.

 

 

 

 

 

Edited September 5, 2023 by Bozza

[saveasteading]

@Harmonyseems to have gone away without any reaction since the first post. Odd. Have we wasted our collective time?  I'll turn this subject off.

[CalvinHobbes]

On 03/09/2023 at 12:16, ProDave said:

In the present climate sell the house and live on site, it may not be what you want to do, but you don't want to be stuck like we were with a part build house (basic shell) all money spent, and the old house would not sell in a dead housing market, not unless I gave away a 5 bedroom house for less money than the construction cost of the new 3 bedroom house (i.e pay to downsize)

How are you getting on now? What do you mean a shell? Is it insulated and plastered?

[ProDave]

2 hours ago, CalvinHobbes said:

How are you getting on now? What do you mean a shell? Is it insulated and plastered?

All finished now and all housing matters concluded.  It was worth it in the end even if it took longer and did not happen quite as planned.  The overall result makes it all worth it.

 

Now winding down my electrical business and retiring.

[CalvinHobbes]

16 hours ago, ProDave said:

All finished now and all housing matters concluded.  It was worth it in the end even if it took longer and did not happen quite as planned.  The overall result makes it all worth it.

 

Now winding down my electrical business and retiring.

Well done. Respect.