Self build mortgage application

[PSC88]

Hi there I am in the process of starting my journey to apply for a self build mortgage application

 

I have a few queries I’m hoping I can get answers too!

 

i own the land already with a bungalow to be demolished.  The value of the land with bungalow is equivalent to the land with its full planning permission for a new build two storey home which will be double the footprint. This has been valued by local agents as such as the bungalow has very little material value and and value is in the land.

 

currently have a modest mortgage on bungalow which is about 25% of the total land value.

 

i will have the funds to clear this completely and start of with completely unencumbered plot and borrow on a self build or alternatively transfer the mortgage to a self build and use the funds to start the build and get through the first stage.

my query is two fold, one is the build cost. I will be project managing contractors and have had quotes as such for the shell and roof and then internal fit out. How much detail will I need to provide for the build cost as I’m based in the midlands and online estimates per square footage is coming out a lot more?

 

Builders have just finished a build on the same road and have given me a quote which is much more reasonable and in line with local build costs.  It’s a straight forward brick and block design with habitable loft space (the loft space square footage seems to be being calculated at a normal square footage rate online) where as usually this will be much cheaper.
 

when estimating build costs will the mortgage company want this WITH or without VAT as obviously will be able to claim some of this back at the end of the build.

 

secondly regarding income multiples me and my wife are both self employed professionals will be be able to borrow 4.5-5x on a self build as per a normal residential? Will any self build mortgage companies take into account self employed retained business income or just salary and dividends. And will it be based on the last year or an average of say 2-3 years.

 

the final value of the house and what we are looking to borrow will be roughly around 50% LTV.

 

many thanks

 

 

 

 

 

 

 

 

 

[Bozza]

Hi & welcome.  Your scenario is almost identical to what mine was 5 years ago.  you can use the forum search facility to find my relevant posts to see what I did.

 

What I did was pick up the phone and spoke to Ecology BS.  They were able to answer all my queries and I ended up going with them.  Many members here speak very highly of them, because they’re very good and straightforward & easy to deal with and release your money within a day as everything’s pre approved.

 

They will give you up to date answers, and options for your situation but broadly I think it will be much cleaner and easier to discharge the domestic mortgage and start over with a straightforward self build, which is exactly what we did.  As you know self build mortgages are more expensive so you really don’t want to have to draw down £££s until you really have to.    After discharging the normal loan, we were able to get though quite a few build stages before having to utilise the SB mortgage,  

 

keep an eye on what normal lenders require (architects certificate or warranties) to allow you to move onto a normal, cheaper mortgage asap.

 

getting the timing right on SB funding can save many £thousands. 
 

Just a couple of tips re your project.  Try to get your cottage knocked down asap and de registered for council tax.  saves a lot of money.  Secondly, we offset the cost of our demo by selling materials from our knocked down cottage and I did the demo mainly myself.  Saved £20k.  

 

 

 

 

 

 

 

[PSC88]

Thanks for your reply

 

I will certainly have a look through your previous posts.

 

did you use a particular broker for the mortgage with ecology or go direct.

 

I too have heard positive things about ecology the issue may be the maximum lending is capped to 650k outside of London and I’m going to need around the £800k mark with my ten percent contingency.

 

also if you visit the ecology website it currently states they are temporarily unable to accept new self build applications and you have to fill out a form to see if this changes.

[Bozza]

41 minutes ago, PSC88 said:

Thanks for your reply

 

I will certainly have a look through your previous posts.

 

did you use a particular broker for the mortgage with ecology or go direct.

 

I too have heard positive things about ecology the issue may be the maximum lending is capped to 650k outside of London and I’m going to need around the £800k mark with my ten percent contingency.

 

also if you visit the ecology website it currently states they are temporarily unable to accept new self build applications and you have to fill out a form to see if this changes.

No I didn’t use a broker, & not aware of them not accepting new applications not sure what that’s about at all.