Self Build Mortgage PreMortgage Valuation

fox65

Hi Everyone

I am trying to work the numbers here and are in the process of applying for our mortgage.

We are doing a self build. We have appointed a builder to a fixed price contract. Build cost will be ~ 400k. At this point how do the bank decide the pre build valuation to calculate the LTV.
I ask for two reasons, firstly, to calc the LTV and thus interest rate,
Also for the HTB scheme. I am nervous of the bank saying that the final value will be in excess of 500k ruling me out of the HTB

TLDR On self build mortgage applications, how do the banks decide the pre-build valuation and how does this impact the HTB

Thanks in advance

dubrov

Your builder contract should contain a bill of quantities detailing the costs of everything to be delivered.
The banks will insist tat a building professional with indemnity insurance (e.g. architect/engineer) signs off on the costings stating they are appropriate for the build.

The banks will then use the signed off numbers as the pre-build valuation. They will insist on at least 10% contingency.

fox65

Thanks dubov for the info.

In my case, if the cost of build is 400k. I have been told by the bank they require a contingency of 15%(60k).
Regardless of this, if the signed off build cost is 400k. This becomes the approved valuation? Do they add in the cost of site purchase?

dubrov

To be honest I am not sure.

They will use either
a) Cost of build plus site cost
or
b) Independent valuation of what the final house would be worth.

Each bank may even be different but I'd guess it is more likely to be a)

Just ring them and you should get an answer quickly