Mortgages for a self build half way through

miguelk

Hi All,
I've a question regarding mortgages and whether they have to be applied for before any work is carried out on a self build.

We're planning on taking on a self build on a family owned site - but we wouldn't be moving down there for a few years to come until I can transfer down with my job.

Given that we have some savings at our disposal, plus whatever we'll save in the future before the move, we're thinking of getting things rolling now without applying for a mortgage, i.e. we're not in a panic so we could be doing things bit by bit before we'd need a mortgage, i.e. getting planning, building foundations up to sub-floor level, maybe even getting the block work and the roof on.

So my question is - Can we apply for a mortgage half way through the build if we take this approach? Are there dis-advantages/restrictions? e.g. less choices of lenders/higher rates? I did an online search and read an opinion to this effect on another board but it was from over 5 years ago.
To me it seems a sensible approach as we would be saving on interest on a mortgage we don't need for a few year - Obviously I'll be checking it out properly before we do anything but I'd be interested to hear opinions/experience on this. Thanks.

killers1

miguelk wrote: »

Hi All,
I've a question regarding mortgages and whether they have to be applied for before any work is carried out on a self build.

We're planning on taking on a self build on a family owned site - but we wouldn't be moving down there for a few years to come until I can transfer down with my job.

Given that we have some savings at our disposal, plus whatever we'll save in the future before the move, we're thinking of getting things rolling now without applying for a mortgage, i.e. we're not in a panic so we could be doing things bit by bit before we'd need a mortgage, i.e. getting planning, building foundations up to sub-floor level, maybe even getting the block work and the roof on.

So my question is - Can we apply for a mortgage half way through the build if we take this approach? Are there dis-advantages/restrictions? e.g. less choices of lenders/higher rates? I did an online search and read an opinion to this effect on another board but it was from over 5 years ago.
To me it seems a sensible approach as we would be saving on interest on a mortgage we don't need for a few year - Obviously I'll be checking it out properly before we do anything but I'd be interested to hear opinions/experience on this. Thanks.

If your mortgage application stacks up in terms of income figures and proven repayment capacity there is no disadvantage to starting the build. You would want to be confident in terms of your employment & income streams. Banks will be happy to lend if you meet their criteria on the above and the works carried out to date will just have the effect of lowering your loan to value which may lead to a better interest rate.

miguelk

killers1 wrote: »

If your mortgage application stacks up in terms of income figures and proven repayment capacity there is no disadvantage to starting the build. You would want to be confident in terms of your employment & income streams. Banks will be happy to lend if you meet their criteria on the above and the works carried out to date will just have the effect of lowering your loan to value which may lead to a better interest rate.

Thanks Killers, ya I understand this is on the assumption that income is safe and will be when applying for the mortgate.

Every bit we can do ourselves without the mortgage is like a head start, it would be fantastic to have a nice chunk done and then have to get a lesser mortgage at a better rate, and paying less interest overall.

Much appreciated.

phormium

I might be stating the obvious but make sure you have the relevant supervising people such as architect or engineer to certify anything done prior to applying for mortgage. You would be surprised how many people just start off direct labour without anybody checking, banks will look for that when you want a mortgage.

killers1

miguelk wrote: »

killers1 wrote: »

If your mortgage application stacks up in terms of income figures and proven repayment capacity there is no disadvantage to starting the build. You would want to be confident in terms of your employment & income streams. Banks will be happy to lend if you meet their criteria on the above and the works carried out to date will just have the effect of lowering your loan to value which may lead to a better interest rate.

Thanks Killers, ya I understand this is on the assumption that income is safe and will be when applying for the mortgate.

Every bit we can do ourselves without the mortgage is like a head start, it would be fantastic to have a nice chunk done and then have to get a lesser mortgage at a better rate, and paying less interest overall.

Much appreciated.

No probs, the main thing to ensure before you start the build is that you are suitable candidates for a mortgage and will be able to meet criteria not just on income but be able to prove you can afford the stressed repayments. Just keep saving over and above the estimated mortgage repayment and then some, and don't use all your savings on the works you do carry out...

killers1

phormium wrote: »

I might be stating the obvious but make sure you have the relevant supervising people such as architect or engineer to certify anything done prior to applying for mortgage. You would be surprised how many people just start off direct labour without anybody checking, banks will look for that when you want a mortgage.

Very true!

miguelk

phormium wrote: »

I might be stating the obvious but make sure you have the relevant supervising people such as architect or engineer to certify anything done prior to applying for mortgage. You would be surprised how many people just start off direct labour without anybody checking, banks will look for that when you want a mortgage.

Ya, definitely. Good advice.

killers1 wrote: »

No probs, the main thing to ensure before you start the build is that you are suitable candidates for a mortgage and will be able to meet criteria not just on income but be able to prove you can afford the stressed repayments. Just keep saving over and above the estimated mortgage repayment and then some, and don't use all your savings on the works you do carry out...

Right, good stuff there too.

We may hold off a bit on this plan actually and build a bit of a reserve that won’t be touched, once we hit that we’ll save for our build fund.

Thanks, at least that’s a good option for me if the move isn’t going to go ahead for a while.