Do I really need a self build mortgage?

[Youngredders]

Hi guys

 

I have a really (probably) simple question; do I require a self build mortgage if I intend to pay cash for the plot and circa 30% of the build cots?

 

I would require an amount of money to complete the build, but does this have to be a self build mortgage?

 

Thanks in advance
 

J

[PeterW]

I would pay 50% for the plot in cash, and keep 50% of your cash for contingencies. Having the mortgage there to draw down if needed is a good buffer and will help you with cash flow.

 

Some of the mortgage providers - Melton BS for example - allow you to also link an offset savings account to the mortgage so you can basically pay no interest up to £25k from memory. Makes a decent saving but means you have the money to hand.

[ultramods]

Probably.

 

You really need to work out how much it will cost to build the house , including garden, professional fees and utility connections etc. Next you need to know what the completed house will be worth.

 

Once you do this you will know what your 30% cash for the build cost and land are worth as a % of the total house value.

 

Lenders aren't going to lend you more money than what the final house would be worth.

 

in terms of the build cost you can get a rough idea using this: https://www.homebuilding.co.uk/calculator/

 

There are also online Quantity Surveying companies that will estimate the cost for £100 - £200.

 

My build cost was estimated by Build Loan for £95. I used Build Loan because I was applying for mortgage through their parent company BuildStore.

Edited April 12, 2018 by ultramods

[epsilonGreedy]

54 minutes ago, Youngredders said:

I would require an amount of money to complete the build, but does this have to be a self build mortgage?

 

 Who else will loan you £300,000 unsecured for a house?

[newhome]

Where are you living now? Do you have any equity in that house that can be used? 

 

I had intended to build my house mortgage free but due to the slowing of the housing market I ended up having to release some of the equity in my old house (which didn’t have a mortgage) to do so as it took longer to sell than I had anticipated. I ended up remortgaging my old house and using that money to continue the build. 6 months later the old house sold and I had enough money to complete without a mortgage. 

 

You could do it like that if you don’t need to borrow anything, and by that I mean that you either have enough money to complete the house to start with or you may be prepared to live on site and pay for the work bit by bit as you can save enough to afford to do the next bit. That could be quite a long haul however. Or you could get a loan from a family member or whatever that you could turn into a mortgage and repay once the house is completed. So there are options but in order to borrow a significant amount of cash you’re likely looking at a self build mortgage. 

 

[newhome]

I’m no expert on warranties but if your plan is to obtain a mortgage on the house once it’s complete the mortgage company may require you to have a warranty for the house. Something to look into anyway.