Hi all. I had planned to build my house with my own funds and once complete  mortgage it with high street lender. I have since found out this is not possible as the lenders will not release funds to repay the funds back into my savings. They consider this personal  debt consolidation. This must be a problem that has arisen before, the build cost is IRO £200k  plot value £400 GDV £850 no mortgage on plot but would like to pull my 200k out and replace with a mortgage when complete. I am hitting a brick wall with lenders and brokers. They are telling me I must use a self build mortgage to build the house out. Can anyone advise on further options? My bank will also lend me the money privately or through my ltd Co (construction) to build the house but still this is unacceptable.  My accountant says there are mortgage  company's that will do the job I just cant find them.

 Thanks in advance.

A

 

I am struggling to understand why, in effect you want to borrow the money, and pay interest on it, just so you can put it back into savings and earn less interest?

I would go through a specialist broker. Here is one from a quick Google. 

 

https://www.onlinemortgageadvisor.co.uk/remortgages/unencumbered-mortgages/

 

Oh and you'll likely need a warranty to get the mortgage. 

"Cash is king"?

 

Would it be possible to convert a small mortgage to a larger one on completion? So maybe start with a small self-build mortgage, say £50k, then after completion remortgage for the £200k?

4 minutes ago, ProDave said:

I am struggling to understand why, in effect you want to borrow the money, and pay interest on it, just so you can put it back into savings and earn less interest?

What's the term. Opportunity cost. 600k a lot to have tied up if he can invest into other business ventures. 

 

A lot of investors have mortgages and equities because in theory equities should perform better. Money is cheap atm.  

Yes that's correct I don't want all that cash tied up in my house. I  want a mortgage on my house and free up my cash for other projects. 

Thanks newhome for link ill give them a call. Yes house will have 10 year NHBC.

Is it a problem if they call it personal  debt consolidation? It isnt a problem for some lenders.

Why not take out a low loan to value self build mortgage? Not draw any of it until nearly finished?

On ‎09‎/‎04‎/‎2019 at 22:13, albert said:

Thanks newhome for link ill give them a call. Yes house will have 10 year NHBC.

@albertI didn't think NHBC did warranties for single builds.

Edited May 2, 20197 yr by Moira Niedzwiecka

1 hour ago, Moira Niedzwiecka said:

@albertI didn't think NHBC did warranties for single builds.

 

They used to do a product called NHBC Solo for self builders as we looked at it for ours but Buildzone was better value and less complicated. 

Apparently NHBC no longer do their self build policy (NHBC Solo) but obviously if you are using a builder/prime contractor they can still offer a policy (Buildmark).

 

Down this page they refer self builders to Buildzone..

http://www.nhbc.co.uk/Warrantiesandcover/CustomBuild/

Self-build homes

If you’re building a home to live in yourself (we call this self-build) then we don’t currently offer our own warranty and insurance product. However, we have an agreement with Self-Build Zone, one of the market-leading suppliers in the self-build sector, who you can approach to discuss your self-build warranty, site insurance and other requirements.

Edited May 2, 20197 yr by Temp

I’m sure I read here recently that the warranty was s waste of money as they try their hardest not to pay in the event of a claim. 

 

Im using my cash to build, can’t see any advantage is borrowing money when I have it in the bank!

7 hours ago, Triassic said:

I’m sure I read here recently that the warranty was s waste of money as they try their hardest not to pay in the event of a claim. 

 

I think it’s a complete waste of money too from a cover perspective but potentially needed if you want a mortgage or plan to sell 10 years post completion. 

I will be in the same situation. 

 

All my cash will be in the house but it will be mortgage free. I will want to pull around £150k out for a holiday home.