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Getting mortgage after work has started

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Hello

 

For various reasons I'd like to make a start on a self build using some of my savings. I own the land outright and I'd like to at least get the services and groundworks/foundations in place ASAP. I'd then like to get finance to finish the build maybe one year from now.

 

Does anyone know how lenders feel about this? Do they prefer to lend at the beginning of a project or are they prepared to lend half way through for example?

 

I'd make sure I have a warranty from day 1.

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We're in a similar situation so am interested to see responses.

 

I did have a chat with the Ecology BS asking this question and their view was to apply for the mortgage when it's needed as their offers are only valid for 3 months. 

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Personally I would not take this risk, what happens if no lenders will lend to you? You will be left with an expensive hole in the ground.

 

If you need money to finish the build and therefore the house will be no use until you have the mortgage then why not just apply for it now? You decide when you draw down the money (based on the type of mortgage, accelerator or arrears) so get mortgage arranged then you could start but don't draw down the money until you need it, therefore you won't start any mortgage repayments. My mortgage is also interest only during the build stage. 

 

Securing a mortgage took me 6 months!

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48 minutes ago, ultramods said:

Securing a mortgage took me 6 months!

May I ask, what caused such delay? Must have been hugely stressful ... 

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I built mine up and put the roof on before I went looking a mortgage.  There where plenty of options but went with ulster bank in the end.  A site with a shell of a house on it is worth more than a site.  The only thing that might be an issue is getting a warranty to cover the work that is already done. But if you don't need a warranty then won't matter. 

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45 minutes ago, Declan52 said:

I built mine up and put the roof on before I went looking a mortgage.  There where plenty of options but went with ulster bank in the end.  A site with a shell of a house on it is worth more than a site.  The only thing that might be an issue is getting a warranty to cover the work that is already done. But if you don't need a warranty then won't matter. 

 

I was just planning to get the warranty before starting any works 

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5 hours ago, Andrew said:

We're in a similar situation so am interested to see responses.

 

I did have a chat with the Ecology BS asking this question and their view was to apply for the mortgage when it's needed as their offers are only valid for 3 months. 

 

Just one other thing, I own my garden plot and also spoke to Ecology, they will only do a repayment mortgage on the self build mortgage and no interest only unless you already have a vehicle setup to pay the capital. They are not going t0 be an option for me as i will be keeping my current property and do not want 2 repayment mortgages running at the same time.

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Not mortgage related per se but HMRC seem to be getting a bit tougher in terms of CGT. Hasn't hit a self builder yet as far as we know but have a read of this to ensure that you understand the potential implications, although if you intend on staying in the house for many years it may not be an issue. The person referenced in the link sold the house 2 years to the day after moving in. 

 

 

 

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roughly how much does it cost to get the shell up and "watertight" per m2? im looking to build a 200k house hopefully 200msqish but only got 100k

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Send your plans out to a few timber frame companies and they will work it out for you.

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Ours is about 70m2.bigger than your intending but as a rough guide it cost us around 115k to get  up to wind and watertight.

some banks won’t look at giving you a mortgage once you’ve started, we approached our bank for a very small amount to tide us over while we awaited some cash coming in but because we were near the end but not signed off they wouldn’t look at it, said they’d give us it once completion certificate was issued 

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