Hi,

I’ve been through the various threads and there are similar questions to mine, but not exactly. I’m sure there’s a simple solution, but I’m struggling to see it.

 

• We have recently retired, so our current income is not huge.
• We own our current home, mortgage free and worth c£1.5m.
• We are (hopefully) about to exchange on a plot for c£1.2m, paid for from savings.
• The new build is estimated at c£1.0m.
• We have some savings to start the build, but will need some sort of finance to complete. Including contingency, a £800k up-front facility which we could draw down against as and when required would be ideal.
• Once complete, we will sell our current home and pay off the finance.

 

My first thought was a traditional loan secured against our current home and the plot (£800k on £2.7m equity), but have been told that traditional lenders wouldn’t lend with our low income. A bridging loan sounds ideal, but they appear to be very expensive.

 

Any advice, much appreciated.

 

 

 

Edited February 15, 20251 yr by awk

Maybe some sort of equity release if that allows early repayment?

 

Paying for advice from an independent financial advisor is probably the best way of assessing your options

We were in a similar position (although lower £s values on plot, equity in owned house, etc). 
 

Bridging loans were ruled out as the repayment terms were 6-12 months (most were <6 months) and repayment terms were eye watering. Most lenders didn’t/wouldn’t factor in plot value when calculating equity. 

 

We ended up selling and renting/ putting most things in storage. It meant the money to build was released and we could start. What happens if you get a loan and then circumstances change and you can’t sell your current home? In the end for us there was less risk (of not having £s to complete the build) and less cost ultimately in selling up and renting. We are renting close to the plot which is a huge bonus, the shoe box we’re currently in makes us appreciate the space in our new house!
 

As an aside it is surprising how long planning/ building regs/ surveys, etc take. We were 8 months between completion to breaking ground and that is not bad compared to some people’s experiences on here. But it can be quite scary - it felt a long time with nothing to show for the self-build leap of faith, with almost everyone we knew questioning what we were doing. Best of luck.
 

 

 

 

 

10 hours ago, DownSouth said:

We were in a similar position (although lower £s values on plot, equity in owned house, etc). 

Snap!

 

We have been round this loop a good few times in our planning, talking to lenders and a very helpful specialist broker.  We’ve decided to use the cash we have plus a small loan of some kind to get to properly watertight - meaning scaffold gone (being nice to close neighbours), roofed, solar panelled, rendered and clad.  This suits us because of the way we are building, i.e. not with a main contractor.

 

And then we stop and wait for our current house to sell.   That way we will either limit, or with a very strong following wind maybe even eliminate the requirement for rental accommodation.  @DownSouth, we’ve had a huge passage of time between completion of purchase and starting work - 14 months in our case - which is less than many - I’d hate to have been stuck in rented all that time.  I guess the interest earned would have been a sweetener.
 

In ‘91 we stayed put, had a self build mortgage alongside our domestic mortgage, and built at furious speed whilst the interest and stress clocked up.  Too much of a white knuckle ride, especially in a falling market.  Plus we had future earning potential, which we no longer have.

 

@awk Could that be an option for you?

@G and J@DownSouth

 

Deciding to go down the self-build route has been a bit of a journey - and we haven’t even started building yet!

 

We have a running joke every time we see a caravan (particularly old beat up ones in fields covered in green slime), turning to each other and saying “we could live in that for 18 months” … not.

 

Realistically, staying put and moving just the once is the only option that would work for us - marriage and cats to consider !!

 

I probably need to work out at what stage we could move into the new house (one bedroom, one ensuite ?) and how much spend we could defer until after selling the current home - we are more up for ‘camping’ in the new house then renting, or a caravan in the mud.

 

We lost the last plot to a Developer (who then messed the sellers around), so we’re not counting chickens on this one until it’s done. Once I know the specifics, I can approach specialist mortgage providers with the problem. Given we have the money the start, then maybe an ultra conservative payment in arrears self-build mortgage could be made to work.

 

 

Forgot to say, we are assuming 12 months before starting build, leaving 24 months to sell to be within the 3 year limit to get refund on second home stamp duty - is that correct?

Just a thought, why delay speaking to a decent broker? Appreciate there is much uncertainty but could help your thinking to kick a few scenarios round, got nothing to lose. 

2 hours ago, awk said:

and cats to consider !!

That was a huge factor fir us first time round! 

 

2 hours ago, awk said:

we are more up for ‘camping’ in the new house then renting, or a caravan in the mud.

 

With you there

 

1 hour ago, awk said:

within the 3 year limit to get refund on second home stamp duty - is that correct?

Yep that's correct....again snap

 

44 minutes ago, Ahad said:

a decent broker

 

We've had several very helpful discussions with Mayflower (used by other BH members). A couple of the things he (Glen) told us, of which we were unaware of

 

1. The fact we had bought the plot (in our case bungalow to be demolished) was not seen as a positive (bit counter intuitive, but apparently they like to be involved in  the whole thing)......have you already paid for the plot?

 

2. The fact that we are very unlikely 🤞🤞🤞to need a mortgage once completed, we are not particularly good "business"

 

3. There is one lender (will try to recall name 🤔) who does not have any concept of affordability BUT the fees/interest structure are steep.

 

This is where "meaness" /choices versus risk appetite etc can come into conflict.

 

Our house goes on the market in spring, just about the time we start on site. Come the end of the summer if we are still in the same £ position we maybe be going round the decision loop again!

 

As many say.....self building isn't for the faint hearted.

41 minutes ago, G and J said:

have you already paid for the plot?

we haven’t, but I’d like to delay any commitment on future funding as long as possible (it’s probably 18 months away) - there are some other options which might come good before we need the money - we have other investments which we would sell if we got the right offer or given the sky high fees, might be worth selling for less than we would ideally like for them.

 

However, I’ll probably have some initial chats with Brokers to understand any options we haven't thought of.

5 hours ago, awk said:

 

we are more up for ‘camping’ in the new house then renting, or a caravan in the mud.

Looks like we’re going to be doing this, our landlord has just told us he wants to sell in April. So we’re thinking of completing bedroom/bathroom and camping in the house. So I’m now searching BH for ‘partial completion certificate’ to work out if we need that or not before moving in… the path of self building is a twisty turny one! 

7 minutes ago, DownSouth said:

the path of self building is a twisty turny one! 

Sure is!

A friend of mine built the garage with a room above and facilities in order to save costs. I’m not sure if there are vat implications with partial completion though

@Jilly @DownSouth

 

I don’t want to tempt fate, but I’ll try and talk to our (potential) Architect during week - one of his sketch options was an end-of-garden home office/gym which would have a basic bathroom/shower. It wasn’t really a focus for us, but if we could camp in it, then it might actually fund itself.

 

Need to understand the VAT and certificate implications as you both say.

 

We could fund it from savings as a phase 1 and start phase 2 after selling the current house - now, why didn’t I think of that? 

 

On 15/02/2025 at 13:09, awk said:

• We are (hopefully) about to exchange on a plot for c£1.2m, paid for from savings.
• The new build is estimated at c£1.0m

Easy way is buy less land and build some smaller. As you say your retired, why do you need something so big, to rattle around in? Then just find out of the bank account. Build, sell old house, put money in bank.

I will just throw a note of caution into the thread.  Don't assume a house is a liquid asset that you can easily sell when you choose to.

 

I found that out after we had started the build (with savings) then put our old house on the market to fund the rest of the build.  That was not many years after the GFC and I had not banked on the housing market still being dead.  I stuck it out for 3 years without a sale and few viewings before taking an offer to let the property instead.  I then had a slow build as you earn doing way more myself than originally intended before eventually selling the old house to the tenant.

 

That could be a particularly dangerous situation of you had short term bridging finance that you need to clear within a set time.

4 minutes ago, ProDave said:

 

That could be a particularly dangerous situation of you had short term bridging finance that you need to clear within a set time.

+1. Our house went on the market December ‘22 and took a year to sell which was only just in time for our plot purchase to complete but would have been a full 6 months after the bridging loan repayment terms. 

1 hour ago, awk said:

@Jilly @DownSouth

 

I don’t want to tempt fate, but I’ll try and talk to our (potential) Architect during week - one of his sketch options was an end-of-garden home office/gym which would have a basic bathroom/shower. It wasn’t really a focus for us, but if we could camp in it, then it might actually fund itself.

 

 

Living on site save a load of rent and is logistically a good thing to do.

Yep, I’d want the money in the bank in advance too. Don’t underestimate how stressful self-building is, and financial worries could keep you awake, along with everything else. Plus you are planning a big project as presumably first timers, so you need a contingency fund.
 

Read stories on here about how architects can sometimes get a bit carried away with big projects and assume you will find extra money. 

 

Alternatively, you could build a smaller place then do the rest as an extension. There are drawbacks to this: VAT and less economy of scale. 

4 hours ago, ProDave said:

I will just throw a note of caution into the thread.  Don't assume a house is a liquid asset that you can easily sell when you choose to.

 

I found that out after we had started the build (with savings) then put our old house on the market to fund the rest of the build.  That was not many years after the GFC and I had not banked on the housing market still being dead.  I stuck it out for 3 years without a sale and few viewings before taking an offer to let the property instead.  I then had a slow build as you earn doing way more myself than originally intended before eventually selling the old house to the tenant.

 

That could be a particularly dangerous situation of you had short term bridging finance that you need to clear within a set time.

There is a part of me that thinks that anyone sensible, who does a careful risk analysis of self building, would quickly delete their spreadsheet and never consider such a foolish idea ever again.  And most of the time I am quite sensible.  However…,
 

We have a plan. What could possibly go wrong ?     :-0 

19 hours ago, G and J said:

careful risk analysis of self building, would quickly delete their spreadsheet and never consider such a foolish idea ever again.  

I thought I was sensible but now it’s hope over experience instead for me. What could possibly go wrong?
The spreadsheet only captures the financial cost…