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Self Build For Retirees

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We both retired early last year.  Rather stupidly we underestimated the Brexit Effect and assumed our house would sell.  With hindsight I wish we had remortgaged whilst both working.  The problem we have is whilst we have a lot of equity in our home, our private pensions are quite low until we can add the State pension.  We have enough savings to get to 1st Fix, but then we run out.  Remortgaging on our pensions would only release 30k to continue the build.  Some solutions I have thought of are:-

Sit on the water tight shell for a year or so.  I believe the plot to be pretty secure.

Change our mortgage to Interest Only and use the 'spare cash' from our existing mortgage to take a loan.

 

Any ideas of yours would be greatly appreciated.

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Anything will sell at the right price, take a hit on your asking price for a quicker sale?

 

If you have enough ready cash to get to first fix, that isn't going to happen overnight, why not start work and while that is going on have the house on the market at a price more likely to attract buyers.

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Depends on your appetite for risk.

  • Sit tight and plan to the 'n' th degree
  • Go for first fix and 'believe'

Keep fit, keep positive, keep fizzing. 😊

Ian

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35 minutes ago, Moonshine said:

Anything will sell at the right price, take a hit on your asking price for a quicker sale?

 

That is what people told me in this position, but I am buggered if I am going to drop the price so the old 5 bedroom house sells for less than the cost of building the replacement 3 bedroom house.  Aka I am NOT going to pay to downsize.

 

MY "solution" to this dilema was raid one of my pensions.  I have one defined contribution pot (the others are defined benefits) and by putting that into flexible drawdown (required transfering to a different provider) I was able to draw 25% tax free, and the rest is available but will be taxed as income.

 

I don't have any worried raiding a pension in this way as the money will be replaced when the old house eventually sells, with the bonus that it will be outside of a pension wrapper so there won't be any tax liability when we draw it to spend.

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How far along are you? If you haven’t started and aren’t committed I would probably put the foundations in as then there isn’t much to worry about as far as security is concerned plus it starts the build from a PP perspective. It will also then allow you to pause and take stock of where you are financially if money it tight. If you have CIL ensure that you follow the rules to the letter or you could lose the exemption. 

 

Then ... consider adjusting the asking price potentially vs weighing up the cost of seeking more finance. How far away from getting the state pension are you? I assume you won’t need a mortgage once the house sells? Borrowing from relatives an option? Taking in a lodger or 2 for a bit? 

 

How much are you planning to do / could learn to do yourself? Plenty on here have got stuck in and have been nothing short of amazing in the ‘DIY through adversity’ scenario.  

 

 

 

 

 

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All good advice above. Personally I'd mothball after founds but my appetite for risk is low. Brexit definitely having an effect. Stuff is still moving but maybe higher end of market a bit sticky?

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1 hour ago, AnonymousBosch said:

Go for first fix and 'believe'

Fwiw this is what we did, and we were lucky enough to have sold the old house just at the end of watertight. Or plan b was to site right down at this point.

 

And we got a sensible price to boot.

 

Best of luck, these are tough decisions, self build is hard enough without having to worry about financing during the build.

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Yes I took a £100,000 hit on my old place but I needed the money to start. We bought a small house as an interim measure and we still have it and rent it out, if the build went over budget it was our contingency money (luckily didn’t need to sell it). I found it was larger houses that don’t sell so well as smaller first time houses. Why not start the build and leave it on the market, if it does not sell by first fix then you can decide to drop the price or mothball the new build.

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Posted (edited)
3 hours ago, Oz07 said:

Brexit definitely having an effect.

in scotland we have had a triple effect --financial downturn in 2008 which carried on longer in scotland then england  --then along came the poison dwarf and her mate humpty dumpty with the indendence ref

humpty dumpty  is gone but we now have snp leader in westminster  -- numpty dumpty stirring it up all the time wanting indi-ref2 and trying to stop brexit

 

just very little movement in a lot of areas of the economy --.the upside may be if you can do it in these prolonged bad conditions ,then it can only get better?

Edited by scottishjohn

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Yes as @scottishjohn says we are STILL waiting for the housing market here recover from the 2008 downturn.  10 years of stagnation and counting.

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Is it possibly the case that the housing market has found its level after over inflated prices for years?

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Thanks All.  We are definitely going to get to water tight shell, windows doors etc all 50% paid for (we secured a top notch product no more expensive than lower grade ones).  OH is very good at DIY so we will proceed slowly.  House price is effected by several local villages being badly hit by HS2, embankments being built next to them, 600 lorries going through daily etc, so some corrupt politician can get to London 20 mins faster.  These houses appear cheaper than ours, but our village won't be affected by HS2.  

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7 hours ago, joe90 said:

Is it possibly the case that the housing market has found its level after over inflated prices for years?

That may be the case that certain areas will only support a certain price.  The problem comes when the price the market will support is no more than the cost of actually building the house.  How is anyone going to build houses then?

 

Mass developers have the economies of scale on their side and by building hundreds of near identical poor houses might just scrape a profit, but there is no money to be made building a decent individual house in many places.  Self builders will still do it because getting what they want is the No 1 goal, or they can save money doing work themselves.

 

It does not bode well for anyone expecting developers to improve the quality of the houses they are building

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27 minutes ago, ProDave said:

Mass developers have the economies of scale on their side and by building hundreds of near identical poor houses might just scrape a profit,

 

umm, persimmon profit before tax £1,090.8m

 

https://www.persimmonhomes.com/corporate/about-us/our-performance

 

"For every home sold, Persimmon made a profit of £66,265, compared with £53,073 at Taylor Wimpey."

 

https://www.theguardian.com/business/2019/feb/27/taylor-wimpey-reports-811m-in-profits-boosted-by-help-to-buy

 

They aren't just scraping a profit!

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1 hour ago, Moonshine said:

 

umm, persimmon profit before tax £1,090.8m

 

https://www.persimmonhomes.com/corporate/about-us/our-performance

 

"For every home sold, Persimmon made a profit of £66,265, compared with £53,073 at Taylor Wimpey."

 

https://www.theguardian.com/business/2019/feb/27/taylor-wimpey-reports-811m-in-profits-boosted-by-help-to-buy

 

They aren't just scraping a profit!

Yes, because I don't see them building any houses up here, they only build them where prices are higher and they can actually make a profit.

 

So people in the SE complain houses are too expensive.  So if they dropped the price from £400K to £340K (and made bugger all profit) would people then say "that's good, houses are now affordable"?

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