Ecology - just something to factor in - valuation based drawdowns

[Bigdeadbadger]

I know there is a lot of love in here for Ecology, and it seems like they are back doing self build mortgages, however I wanted to raise awareness of my scenario which painfully affected my build.

As with many providers, Ecology support a valuation based system where a 3rd party valuer inspects your build and approximates it worth as the build progresses.  Simple.

 

Well, not always.  In my case, after completing my foundations (which were pretty extensive - insulated slab @200m2, 22KL water harvesting tank, gas membrane etc etc), Ecology's valuer suggested "irrespective of the cost of the work done, if we were to sell the site on the open market, a builder might rip out all works done to date".  This position basically stunted the size of my next drawdown to being effectively useless, as they would not recognise the vast majority of the 6 figure sum to do the works as having had any material value on the site 😲

 

Why is this important?  because it is compounded when you have a kit type build (like SIPS in my case).  Which they also cannot recognise value from util the kit is fully erected, yet requires you to pay heavy upfront payments during its manufacture and then also costs to install.

 

The nett effect of all of this is, Ecology only lent funds based on the original value of my plot, and then nothing until my founds were complete and SIPS kit fully erected.  Now clearly, depending on the size and scale of your build, and the value of your plot, this funding gap may be easy to close yourself.  However, I would hazard for most builds this is running easily into tens of thousands of pounds and more likely into hundreds of thousands of pounds.

I certainly know, this was not the volume of cash flow I had anticipated I would have needed based on the Ecology story, and is still having ramifications as I try to fund Window deposits whilst having largely self funded all the way to getting my kit up.

So, just something to factor in as you try to figure out your cashflow, and when Ecology might allow you to draw down.

 

Edited Thursday at 17:22 by Bigdeadbadger