Ecology mortgage phased money timing

[dnoble]

I have a self build mortgage with Ecology.

 

What I hadn't realised is that release of each phased lump of money is dependent on a surveyor coming and looking at the site and confirming that after whatever has been done, the current increased value of the build means they can release more money.

 

This seems a bit peverse, as often you need to have spent the money to achieve the work which will increase the value and release the money!

 

Specifically with a passive timber frame house, much work is off site there is nothing to see until they deliver and erect it.. But the frame builders (MBC) want a proportion of the money before, and on delivery.  Similarly  Ineed to pay half the windows + doors cost; a big lump, but said windows are not on site to be seen yet..

 

Has anyone else encountered this rather bizarre catch22 situation? Any advice for negotiating it. Ecology seem to just read the rules they have written down

 

Dan

 

 

[PeterW]

Is this an advance mortgage or an arrears mortgage ..?

 

They only release when the value is agreed - the benefit of advance is you get the money up front. 

 

With TF builds you tend to ask for foundations, frame, watertight, first fix, second fix as the stages so you really end up with 15-45-15-15-10 as the percentages roughly speaking. 

[ultramods]

Yes cashflow is a big issue with TF construction. If cashflow is a problem you could:

 

Ask for a release once the foundation is complete.

The next once the timberframe has been erected (but don't pay for it to be insulated at this stage and don't purchase the windows+doors).

 

 

[dnoble]

6 hours ago, PeterW said:

Is this an advance mortgage or an arrears mortgage ..?

 

In theory I think it's advance though not sure I understand the difference...

This mortgage seems to depend on what you have built being valued at a level where they will lend you 75% of it's current unfinished value. 

I think they will release some money when the foundation is done. It's just ideally I need this as the foundation is done. 

 

Presumably they'll release more when the Frame is delivered and up, though the agreement with the frame company is that I will pay them a Lump on delivery. I'm going to have to wait for another valuation and report from surveyor.

 

I hadn't really clocked this where I signed everything which I shall have to chalk up to experience I suppose..

 

[Temp]

If they pay at the begining of a stage it's an advance mortgage. If they pay at the end of a stage then it's an arrears mortgage. Sounds like you have an arrears mortgage.

 

Normally builders are paid in arrears so either should work. I you are using subcontractors and buying materials without a credit facility then an arrears mortgage could be a problem unless you have some cash.

 

Best check the terms and conditions.