Fulfillment Through a Self-Build Mortgage
People who build their own homes have a profound sense of achievement. Not surprisingly because it can be overwhelming when looked at objectively. First you have to find a plot of land then buy it. Engage an architect to design your home and follow through to get planning and building permission. All of which takes huge amounts of time and no small expense. So at what point do you apply for your self-build mortgage. Good timing and effective cash flow management is essential, because you probably need to maintain payment on your current mortgage concurrent with the self-build one.
Like the man who, with limited help, has managed to build a beautiful, high quality, five-bedroom home in a Northumberland beauty spot for himself and his family. It’s a great value-adding thing to do too, but it wasn’t a smooth project.
He describes it with all the old clichés as a ‘real labour of love’ with ‘blood, sweat and tears’ He paid £155,000 for a quarter-acre plot of land in picturesque Alnwick. He spent about £200,000 on construction and recently had the finished home valued at £600,000.He worked 13 hours a day, for a minimum of five days a week, over a year and a quarter on the project.
He lived in his own home at the time in Newcastle, while his chose specialist mortgage broker found him a self-certification self-build mortgage funded by The Mortgage Business This enabled him to pay for both properties at the same time.
This was an "Accelerator" mortgage, which gave money to build the place at the start of the project. When the home was finished, the family moved in and let out the Newcastle property. They then remortgaged both properties through a different cheaper lender.
He has already bought another plot of land near Newcastle for his next self-build project.
The only difference between a self-build mortgage and a traditional mortgage is that with a self-build, the cash is transferred to the borrowers account in stages as each project stage calls for it. An independent mortgage broker who specializes in self-build and remortgaging is a key to success for such a project.
Some mortgage companies will typically lend you 75% of the value to buy the land, and then keep you going by releasing cash in about five lots. Either at the end or the beginning of the stage called in the jargon ‘arrears stage payments’ and ‘advance stage payments’ respectively.
Money management is a key skill for the self-builder if liquidity problems are to be avoided. Early payment of money with the advance stage payment method is probably preferable. The ‘accelerator’ self- build mortgage makes it is easier to stay in your present house while the construction goes on.
|
