Selfbuild mortgage advice!

[Amateur bob]

13 hours ago, Bozza said:

I doubt it as I’m pretty sure they are strictly regulated.   A low LTV means they lend at a lower rate.  Their ideal situation will be lending lots of money with a higher LTV & interest rate to someone who is certain to make the payments.   They’ll be worried about having to repossess a half finished house.

 

Re other issues discussed,Ecology don’t require you to build A rated you’re likely to get a decent B rate pretty easily with decent spec build.  And yes they lend in Scotland. Their fees were if I recall cheaper than Buildstore.  I’d strongly advise to have a phone conversation with them they are very, very good.
 

As you are saying you are borderline on affordability if I were you I’d save religiously while interest rates are high and you’re away to move into a caravan.  Build up that cash while interest rates at high and give yourself a chance to demonstrate repayment affordability.    Interest rates are widely expected to fall into next year.  
 

Due to your savings it’s going to be well into your build before you drawdown any of an approved mortgage, and you can do so on interest only basis.  As such your monthly payment are going to be quite low until you finish the house and convert into a residential mortgage, by which time mortgage rates will be lower.
 

I assume the quotes to build are for a big and higher spec house at £350k, have you had a conversation with the builders to see if you can reduce costs.

 

That is just my opinion.

 

yes im trying to save up but dont want to be in a caravan for years, yes thats a good point ill be better to use up all my own cash first then start on the borrowed money later in the build, the house is 185m2 its a rectangle shape and 1.75 storey, im trying to negotiate price hoping to get down nearer 300k

 

 

 

 

 

 

[Amateur bob]

10 hours ago, PNAmble said:

a bridging loan is based on valuation not affordability, pretty expensive option.  
 

id talk to a broker (recommend mayflower). 

i wouldnt be able to get a bridging loan to build a house though?

[Amateur bob]

10 hours ago, PNAmble said:

What do you mean a surplus ?   Effectively the lender cares about 3 things. 
 

1) affordability

2) the end valuation

3) your ability (risk) to finish with your and their money. 
 

 

i mean a surplus of cash in my personal account at the end of each month

[G and J]

5 minutes ago, Amateur bob said:

i mean a surplus of cash in my personal account at the end of each month

Cash is not profit.

[Amateur bob]

10 hours ago, PNAmble said:

a mortgage company will take your last two or three years of accounts and average it; I (limited company) had to wait until my 2nd year accounts had been completed.  My partner (sole trader) had to get an accountant to certify her last three years of accounts. 
 

They won’t care what you pay yourself.  It’s about your business account/ profit.   

this is interesting as i spoke to a broker and she said some lenders might only want to see 3 months of bank statements from my personal account? and tax returns etc

 

, im hoping this is the case as my partnership accounts have 4 of us in them, myself, brother mum and dad, myself and brother have been taking the largest profit share each year though as mum and dad live in a mortgage free farmhouse and have pensions so dont need as much but a lender might take a different view and say we should all be taking equal shares of net profit and then my profit wouldnt be large enough for the mortgage

 

is it possible your lender was unusually strict on you? 

 

 

[Amateur bob]

2 minutes ago, G and J said:

Cash is not profit.

yes but demonstrates ability to pay a mortgage? i would also need tax returns etc to prove profit

[Jilly]

The other option is to stay in the static, go slow and ‘build as you earn’. It’s not for everyone though. 

[Bozza]

@Amateur bob I doubt any BH members are likely to have the unique equivalent financial arrangements and circumstances you have, and you’re really going to have to speak to the lenders at this stage.  Either they will lend to you, or they won’t.  If they don’t as @Jilly says you may have to build as you earn, or restructure your finances until they do.

 

I’m pretty sure that lenders won’t want to NOT lend to self employed as a principle, as there are a lot of self employed people.     But I am aware of situations whereby self employed people have minimised their personal income (to reduce personal tax liability), or because they are ploughing their profits back into their business and paying themselves a tiny wage.  Though entirely legal, it has bitten them in the bum when trying to secure personal finance, for obvious reasons.     
 

The lenders will definitely give you a steer better than anyone at BH can. 
 

If your family business is cash rich have you explored the potential of a loan from the business.
 

 

 

 

 

 

 

[Amateur bob]

3 hours ago, Jilly said:

The other option is to stay in the static, go slow and ‘build as you earn’. It’s not for everyone though. 

yes that could be a slow process though and material prices could rise as quick as i earn if interest rates were to drop? i may have to consider it though

 

if theyre not going to approve me for the full amount is it likely a lender would give me at least some money to do the build i.e 2/3 or something given my wife is on a secure salary of 20k per year

[PNAmble]

I agree with @Bozza , it’s a complex financial transaction and  depends on company structure and personal tax situation.  You will need good professional advice . 

[Amateur bob]

2 hours ago, Bozza said:

@Amateur bob I doubt any BH members are likely to have the unique equivalent financial arrangements and circumstances you have, and you’re really going to have to speak to the lenders at this stage.  Either they will lend to you, or they won’t.  If they don’t as @Jilly says you may have to build as you earn, or restructure your finances until they do.

 

I’m pretty sure that lenders won’t want to NOT lend to self employed as a principle, as there are a lot of self employed people.     But I am aware of situations whereby self employed people have minimised their personal income (to reduce personal tax liability), or because they are ploughing their profits back into their business and paying themselves a tiny wage.  Though entirely legal, it has bitten them in the bum when trying to secure personal finance, for obvious reasons.     
 

The lenders will definitely give you a steer better than anyone at BH can. 
 

If your family business is cash rich have you explored the potential of a loan from the business.
 

 

 

 

 

 

 

yes im going to speak to lenders soon i just want to do my homework first and find out what they will all be looking at, the business has some cash in it and also a 100k od facility which its not overdrawn on so some scope there but will depend how the harvest goes, if they could at least get me to wind and watertight stage i could work away doing some of it myself but id rather get the full amount and be done with it