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Hi My brother now 63 wants to build his own house he owns a plot of land and has had plans drawn up and passed for our locality. He is waiting to sell his existing home that will be divided between him and X wife.
He has enough money for the foundations and all services and to start the build.
Problem is that he wants a loan until the existing home is sold so he can get on with the build.
It seems strange to me as the amount he alone will get from the existing home far exceeds the cost of the new build.
He tried his bank and building society who he has been with for many years but they wont give a mortgage or loan on whats called a self or new build even though it will be built by professional builders etc.
I am looking for a well known lender or building society to help.
I have googled this problem but I am not really getting anywhere there is plenty of info etc. but not on lenders banks or building societies on new builds.
Any lender will see a big problem. he does not have the money yet -
1, the house is not sold yet
2, what is the guarantee that he will get half the money? Is there a legal agreement?
It may be worthwhile to ask a morgage advisor or Radio 4s moneybox.
'He tried his bank and building society who he has been with for many years but they wont give a mortgage or loan on whats called a self or new build even though it will be built by professional builders etc.'...surely not the same lot who, until recently, were dishing out loans and mortgages to anyone, with little or no checks as to their ability to repay. I am aghast and stunned at their draconian volte-face!
This is age discrimination. I thought of doing this and was in your brother's situation. Went to a number of banks and Building Societies, before the credit crunch, and they would not loan to over 60 year olds for self builds, even with huge equity in existing house. Had I gone ahead, I decided I would have to sell my house, then rent (or move into a caravan) and store furniture during the build. Wiz - king. There is no risk. The bank would take a lien on your existing house and hold the deeds until it is sold.(just as if you had a mortgage)
Without his ex wife's co operation (and I guess this would be unlikely, even if willing likely to be swayed against when getting obligatory independent legal advice) I think there is little chance of any lender assisting in the circumstances. Best hope is to secure an early sale on the current home. It is possible that a lender might assist if an unconditional contract for sale exists with a solicitors undertaking over his share of the proceeds pending completion of the sale.
isn't a new thing, it's always been the case. That said, there are lots of specialist lenders who will provide the finance, provided certain conditions are met.
Mortgages of this type are usually funded in instalments - the lender releasing chunks of cash at certain key stages in the project, provided an architect issues a certificate. Generally those key stages are:
1. The purchase of the plot
2. Foundation in and structure raised to DPC level
3. Building Weathertight with windows in.
4. Electrical/plumbing/carpentry first fix.
5. Building plastered out.
6. Final fix.
Individual lenders' requirements may differ slightly.
The important thing is to find a lender who will fund the project in advance, releasing payments so you can buy materials and pay sub-contractors as you go.
You are correct in general terms FE but the problem is most lenders will be very cautious where the borrower is 2 years short of retirement age and repayment is dependent on split proceeds from the sale of a marital home where there has been a marital breakdown.
I very much doubt if they will agree for over 60's. Hope I am wrong!!I tried once.
Thank you all for for your opinions and feed back.
john bunyan Your thread seems to be the way it will go.
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