Amateur bob

is it difficult to borrow if you have a deposit

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12 minutes ago, Amateur bob said:

would i be better to look at what mortgage i can get before putting planning in? wouldnt want to get planning for a 250msq house only to then find out the biggest i can afford is 180m2, what would i do then? thanks! 

The trouble with that is lending policies change, That would be no guarantee.

 

Like some years ago we wanted new windows in a rental flat. I went to see the bank (black horse) and they said yes no problem to a small extension to the already small mortgage on the property.  So I booked the windows, and paid the deposit.  When I went back 2 weeks before the windows were due to do the paperwork, the computer blew a raspberry at us "you no longer meet the lending criteria"    If they were the last bank standing I would not give them any of my business again for treating us like that.

 

 

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2 minutes ago, ProDave said:

The trouble with that is lending policies change, That would be no guarantee.

 

Like some years ago we wanted new windows in a rental flat. I went to see the bank (black horse) and they said yes no problem to a small extension to the already small mortgage on the property.  So I booked the windows, and paid the deposit.  When I went back 2 weeks before the windows were due to do the paperwork, the computer blew a raspberry at us "you no longer meet the lending criteria"    If they were the last bank standing I would not give them any of my business again for treating us like that.

 

 

thats worrying, what is the normal procedure for self builders?

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I think you’d need to have planning permission before you approached lenders about a mortgage unless you were just enquiring about the probability of obtaining a mortgage, lenders would want to see what you were meaning to build.I also think 250m2 is quite a big house for a first self build in which you need funding, we built our first one of 168m2 on a full mortgage and then moved up to a larger one once we had a good bit of equity, just a thought 😁

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Just now, Christine Walker said:

I think you’d need to have planning permission before you approached lenders about a mortgage unless you were just enquiring about the probability of obtaining a mortgage, lenders would want to see what you were meaning to build.I also think 250m2 is quite a big house for a first self build in which you need funding, we built our first one of 168m2 on a full mortgage and then moved up to a larger one once we had a good bit of equity, just a thought 😁

id own the plot outright and 100k deposit for  build but only got 30k income to show between myself and wife do you think im unlikely to get mortgage?

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22 minutes ago, Amateur bob said:

thats worrying, what is the normal procedure for self builders?

 

We hit a lending policy change right when we came to draw down our already agreed (and fees paid for) mortgage.  We arranged an interest only mortgage on our existing house (which we didn't have a mortgage on) to cover the part of the build for which we hadn't got enough savings for.  This was arranged directly with our bank, Santander, who gave us a mortgage offer, did the valuation survey etc, took the arrangement fees from us etc, and then left the agreed mortgage on hold for a couple of months until we needed to draw down from it.  We'd planned ahead in arranging the mortgage, but didn't want to draw it down too early as that would have incurred additional interest.  We only needed to draw down on it in order to pay the first big payment to our frame supplier (who we'd already contracted with).

 

When I went in to our local Santander branch to arrange the draw down, they told me that their lending policy had changed, and that as I was over 60 they would no longer lend us the money.  They also refused to refund our arrangement and valuation fees.  This left us in a blind panic, as we needed to pay the frame supplier, but thankfully the Ecology Building Society were both prepared to lend to us and were able to arrange a mortgage in a couple of weeks (they get full marks from me, although they are not the cheapest lender).  I then did battle with Santander for nearly a year to get our fees back.

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14 minutes ago, Amateur bob said:

id own the plot outright and 100k deposit for  build but only got 30k income to show between myself and wife do you think im unlikely to get mortgage?

Sorry forgot about your deposit, it’ll really all depend on what you are looking to borrow, personally I think I’d still go for a slightly smaller house, there is nothing worse than the stress of not knowing if you have enough money to finish and having to compromise on materials

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On 03/06/2019 at 08:33, Amateur bob said:

would i be better to look at what mortgage i can get before putting planning in? wouldnt want to get planning for a 250msq house only to then find out the biggest i can afford is 180m2, what would i do then? thanks! 

 

While lending criteria may change over time, you're absolutely right that your project isn't going to get anywhere if you can't afford to build the design that you've got permission for.

If you know that you'll need a mortgage to finance the build then it definitely seems sensible to work out the approx figure you might be able to borrow and get a rough understanding of the typical lending criteria. This is one of the things I've been doing over the last few months because the mortgage figure affects the total project budget available, which in turn affects how much I can spend on buying the plot.

 

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Posted (edited)
On ‎03‎/‎06‎/‎2019 at 09:08, Amateur bob said:

id own the plot outright and 100k deposit for  build but only got 30k income to show between myself and wife do you think im unlikely to get mortgage?

 

Go ask them what sort of earnings multiple they are lending at the moment. Google found thus but it might be out of date?..

 

https://www.buildstore.co.uk/finance/selfbuildmortgages-article-6.html


 


Income & disposable earnings

•For the employed, most lenders limit their lending to around 3.75 times sole income, 3 times joint income, or 3.75 times first plus one times second gross annual income; for self-employed, it's based on Net Profit Before Tax, evidenced by two or three years accounts

•Lenders will also assess your ability to afford the mortgage, based on current and future commitments and outgoings

 

3x joint income would mean they will lend you around £90K.
3.75x would mean they will lend you around £112K

So you would have the plot and between £190-£212K to build the house.

 

https://www.homebuilding.co.uk/average-self-builder-spend-report/

 


Build costs for just over half of self builders ranged between £900 and £1,500/m²


 
If you worked on £130 per square foot that's around 1400sqf/140sqm to 1600sqf/160sqm.

Your mileage may vary as they say.

 

Edited by Temp
Tried to fix poor formatting

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On 12/06/2019 at 14:38, Temp said:

 

Go ask them what sort of earnings multiple they are lending at the moment. Google found thus but it might be out of date?..

 

https://www.buildstore.co.uk/finance/selfbuildmortgages-article-6.html

 

 

 

3x joint income would mean they will lend you around £90K.
3.75x would mean they will lend you around £112K

So you would have the plot and between £190-£212K to build the house.

 

https://www.homebuilding.co.uk/average-self-builder-spend-report/

 

 


 
If you worked on £130 per square foot that's around 1400sqf/140sqm to 1600sqf/160sqm.

Your mileage may vary as they say.

 

thanks this would sound about right from what ive heard so far, looks like ill struggle to build a 2 storey house then? might be better just putting in planning for a bungalo?

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2 hours ago, Amateur bob said:

thanks this would sound about right from what ive heard so far, looks like ill struggle to build a 2 storey house then? might be better just putting in planning for a bungalo?

A bungalow won’t cost you half what a two storey would, bungalows end up more expensive as you still have roof, foundations etc and probably a bigger footprint than a two storey 

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Just to be clear with regards to sqm. Is that usable intermal sqm or external footprint sqm (I.e including walls)? What's the convention if there is one? 

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34 minutes ago, Miek said:

Just to be clear with regards to sqm. Is that usable intermal sqm or external footprint sqm (I.e including walls)? What's the convention if there is one? 

 

The convention is gross internal floor area, of all habitable floors.  The footprint will usually be larger than the ground floor area, by the thickness of the external walls.  For example, our 130m²,  1 1/2 storey house has a footprint of about 85m². a ground floor area of about 75m² and a first floor area of about 55m².  If our house was a bungalow on the same footprint then the floor area would be 75m².  Although a bungalow would have a lot smaller habitable area, the foundations and roof cost would be the same as for the house, the only saving would be a small reduction in the external wall cost and the cost of the internal stud walls and flooring on the first floor.  Not much of a saving, really.

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15 minutes ago, JSHarris said:

 

The convention is gross internal floor area, of all habitable floors.  

That's what I though. Thanks 

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