Moving off a self build mortgage

[Bitpipe]

So time has come to move away from Ecology and lock into a cheaper rate. 

 

Have just passed the 2 year lock-in period and have shortlisted a two year and five year fix which I need to decide upon.

 

I have a warranty (Zurich) but do not yet have a completion certificate from BC, need to finish a few external elements before I'll get that.

 

Talking to the broker (found through Quidco), there's an open question as to whether that's needed for the mortgage, depends on how diligent the surveyor is. 

 

Anyone else done this recently and anything else to watch out for?

[MikeSharp01]

You have a big choice now, you can go for tracker / fixed / offset in all kinds of combinations. Watch out for fees as depending on how long ahead you are looking and what circumstances, including personal, you see ahead the fee / lower fee / no fee equation can get a bit fraught. You may or may not be thinking forward to helping the kids as this can have a bearing as well because, among other things, the longer the fix the more the early repayment charges will be etc. One thing to bear in mind is that if you choose a fix then at the end of the fix period the provider is usually obliged, check, to offer you the chance to move to any of their other products without complications of applications etc. Also if you go for a fix try and get them to max out your repayments so that you end up with the smallest possible, you can afford,  outstanding amount at the end of the fix that way you are making the most of the interest rate.  

[ragg987]

I did this in January, we went with Melton who had also provided the build mortgage and avoided all redemption and new mortgage fees, which represents quite a big saving. The new mortgage was not the cheapest in the market, but the rate difference would have required 3 years to pay back the fees.

 

I decided to take the variable rate and took on the risk that the base rate remains low for the near term. Fixed rate was higher.

 

BC sign off was a prerequisite, same for moving off build insurance to standard insurance.

Edited September 9, 2017 by ragg987
typo

[ragg987]

Regarding BC sign off, they were OK that some internal and external build was incomplete, I discussed prior to final inspection.

 

Also, VAT on materials after this date was refunded no problem, though bear in mind you have 3 months to submit the claim.

[Bitpipe]

Just had the surveyor round for the valuation and we hit our target which is a relief. He asked if we had a warranty (not needed to show it yet) and no mention of BC so will see if that comes up again.

 

This is the first independent valuation we've had since building so nice to know that we're pretty much sitting on what we paid for the plot plus the build spend.

 

Our LTV is only 30% so are in a good lending position - have decided on a 2 year fix at 1.09% with very low arrangement costs. Cheapest 5 year was 1.8% but even taking another set of arrangement fees into consideration, rates would need to go up by a fair bit to justify the additional spend over the 5 years.

 

I'd expect that when all the external works are complete and the whole plot looks 'prettier' we'd command more of a premium, market depending. However no plans to sell so that's a moot point

[Bitpipe]

So just got a call from the broker to say that the re-mortgage will complete next week, went for a 2 year fix as I don't see rates increasing dramatically in the next few years (based on the recent MPC guidance anyway). Decided to keep the monthly payments the same as Ecology as we're used to it now and cut the term to match.

 

Never had to show any BC completion (which is just as well as it's still outstanding until a last few bits of glass go in) and the surveyor only asked if I had a warranty - never confirmed who with or asked to see anything.

 

So, one less thing to worry about!

 

  

[Trw144]

On 09/09/2017 at 15:56, Bitpipe said:

So time has come to move away from Ecology and lock into a cheaper rate. 

 

Have just passed the 2 year lock-in period and have shortlisted a two year and five year fix which I need to decide upon.

 

I have a warranty (Zurich) but do not yet have a completion certificate from BC, need to finish a few external elements before I'll get that.

 

Talking to the broker (found through Quidco), there's an open question as to whether that's needed for the mortgage, depends on how diligent the surveyor is. 

 

Anyone else done this recently and anything else to watch out for?

 

I m due to do the same - can you confirm the two year lock in period starts from the first draw down on the set build mortgage?

[Bitpipe]

13 hours ago, Trw144 said:

 

I m due to do the same - can you confirm the two year lock in period starts from the first draw down on the set build mortgage?

 

Yes, the only thing I would have done differently with Ecology is immediately draw down £20k or so to get the lock-in clock ticking. They really don't seem to mind how much you draw down and when. There are no inspections or criteria to meet, you just ask for the cash yourself (no need to involve solicitor).

 

We were working through a cash buffer for the first stage of works and when that ran out drew down 50% of the loan for the next major piece. Our thinking was that we were minimising our interest repayments but meant we probably over-ran by 3-4 months on the redemption penalty.

 

However we did benefit from a reduced rate due to achieving EPC A rating .

[Trw144]

1 hour ago, Bitpipe said:

 

Yes, the only thing I would have done differently with Ecology is immediately draw down £20k or so to get the lock-in clock ticking. They really don't seem to mind how much you draw down and when. There are no inspections or criteria to meet, you just ask for the cash yourself (no need to involve solicitor).

 

We were working through a cash buffer for the first stage of works and when that ran out drew down 50% of the loan for the next major piece. Our thinking was that we were minimising our interest repayments but meant we probably over-ran by 3-4 months on the redemption penalty.

 

However we did benefit from a reduced rate due to achieving EPC A rating .

 

Yes - agreed l, in hindsight it would be best to draw down a small amount early on. We also got the reduced rate but technically should nt have as we did nt actually meet the higher spec they required at the time of taking out the mortgage. I think ours comes up for renewal on Feb/March (need to double check). The draw downs are very easy - although we were so far ahead in terms of loan to value I don't think it was an issue.

[Bitpipe]

Yes, we were 33% LTV on predicted finished value so maybe thats why they were relaxed.

 

When we applied for the discount after getting the final EPC, they initially required BC sign off also but then changed their minds

 

Genuinely lovely firm to deal with.

[Trw144]

Agreed -  definitely too nice to be mortgage providers