Looking to start a new build in the near future........I'm looking at the certificate for the first stage payment for mortgage drawdown........I presume that there is actually nothing for the engineer to inspect at this stage because theoretically I wouldn't be starting until I get the first payment from the mortgage company.........is this correct.........someone could possibly advise, thanks
No, it's not. You have to do the work (i.e spend the money) and then the lender gives it back to you.
Nuisance I know but it's how it works usually.
If you are getting a drawdown to buy the site this is released on a valuation of the land carried out by an Auctioneer/Valuer from the Bank/Lending Institutions own list.
If this is the First Stage Payment Drawdown Request then only Monies to the value of works carried out can be drawn down. If no works are done no monies can be drawn down.
thanks guys, I suppose that makes sense alright......thinking about it, it's probably risky for the bank to be lending for works that aren't yet complete!! Especially nowadays!
So the first stage payment is to be issued at say the foundation stage to get the ball rolling!!
Are you using a contractor? If you are then check what way they want the bill split and make the draw downs in accordance with that remembering that your final payment should be the smallest and that if you have borrowed money for finishing you need to take that into account.
If you are using direct labour then you need to think about how long credit you have with your providers and what trades you are going to have involved in the first little while and who will want to be paid sooner rather than later (ie. groundswork has to be paid for close to the beginning but the 1st fix plumbing that goes into the base is in with the rest of the 1st fix plumbing that isn't paid for until much later. For example my "bill" for what has been done at the moment is touching €30k but I have only actually handed out €4.
So can someone tell me what is a timeline for first drawdown where using a builder.
Are people expected to have a large lump sum to get the ball rolling.?
We own our site and have planning. If you get 3 months for drawdown from a bank are your supposed to get a certain amount of work done before you can start the mortgage? How long should be allowed for this if so as you dont want to start and find with delays the 3 months have elapsed.
Generally speaking a lot of builders will look for a payment when they have reached a certain stage of construction - a lot of times that would be at sub floor level. You should have your builder tied down to a legal contract which your solicitor will arrange for you. That will dictate the time frame in which he has to complete each stage and what amount of money you need to pay him at that stage. Of course all of that is subject to your architect/engineer/technician inspecting the completed stage and issuing a cert confirming that the works are satisfactory and putting a value on the cost of the completed works at that stage
I've raised this with my bank on numerous occasions. With so many suppliers refusing to deliver until they are guaranteed a cheque on delivery or their rep collects a cheque before sending out the goods, how can people be expected to draw down the money after they've completed the work? What if someone didn't have any savings?
I was lucky enough to have some savings for my build so had cash but by the time of building I had spent close to 20k without even lifting a sod of turf (architect & planning costs, site insurance, council fee etc.).
I know one friend who got around it with an architect who trusted them to do the work and signed off on work before it was done so that the cash could be drawn down.
That was the architect's own risk to take though.
the vast majority of self build mortages not are not 100% so its not an issue, the savings should be used first to pay deposits etc.
this is something self-builders, or direct labour jobs, should take into account when deciding not to engage a contractor. A contractor should be expected to carry a certain amount up to stage complete. A self builder wouldnt have the same relationship with hardward stores, concrete companies etc, so theres a certain reasoning behind this.
where i see the most problems is the time lag between the signing off and the actual paying out by the mortgage provider.. some times this can go to 2,3,4 weeks on the first stage payment. The interim ones are generally a lot quicker
20 years ago I remember doing up letters of confirmation for banks to provide bribging loans until stage payments were due to be released so suppliers could be paid. It's a bit tougher now though as no bank is giving out bridging.
Not many doing it though, you would need to know and trust the people you are drawing the stage down for. There were cases in the past where bills were not paid and the clients were driving around in a new car instead..... I would only consider releasing a stage before time if the payment was being released to the solicitor and where the solicitor gave a written undertaking to spend the stage on the build only.
I have to say I have been very fortunate getting 90 day accounts with builders merchants here (references required) and getting the same rates as the tradesmen I am dealing with because they are all telling me the prices they are getting and ensuring I am getting the same price One of them was surprised to hear the price I had gotten for concrete
I can see how hard it could be if you had no references to give the builders providers or simply didn't know who to ask for the best/cash prices for things.
I myself am in the middle of a self build and the mortgage company were the ones who decided when each payment was to be made
1- wall plate level
2- slate and ridge tile completion
3- floor in electrics 1st fix and plumbing
I'm sure companies will probably vary. my contractor was aware of this and it was fine by him and we had a bit of savings to play with