Colin Dale is head of lending at Skipton Building Society
“The loan is affordable, but more options would be open to the couple if they compromised by selling their home and finding temporary accommodation, thereby unlocking their equity from the sale. By freeing up their working capital, finance would be available to buy the land and work could commence, while keeping costs low.
"The couple should consider using a specialist company, such as Buildstore, which, through its expertise and connections with a range of specialists, can help them achieve exactly what they want, managing the project from plot search to completion.
"Flexibility is crucial when choosing a mortgage. As a member of Buildstore’s panel, Skipton can offer the couple 95 per cent of the land value and 95 per cent of the costs released at each stage, in advance of the work commencing. This would enable them to stay in their current home until the project is completed, ensuring all their needs are met.”
Tony Cardiff is sales director at Alexander Hall
“Although I would need more information to make a full recommendation, it would appear that the best course of action for the couple would be an application to The Mortgage Business (TMB) through Buildloan. As they do not intend to sell their existing property yet they will need a lender that offers high income multiples.
"TMB’s affordabiltity calculation can reach five or six times joint income and it has the most flexible criteria, offering loans of up to 95 per cent of land and build costs. This is subject to the overall loan not exceeding 85 per cent of the final valuation. The advantage of applying through Buildloan is that funds can be released in four tranches at the start of each stage and without the need for interim valuations.
"The costs of each stage must be identified before the project starts and the facility enables funds to be released before the builders have to be paid.”
Darren Pescod is managing director of The Mortgage Broker Ltd
“As Andrew and Nicola’s current home is unencumbered, I’d suggest the following course of action. Their current home is worth £550,000. I suggest that they remortgage this property up to £300,000 – which is the amount that they require to purchase the land and provide funds for build cost – with Coventry BS on its variable rate of 5.95 per cent with no redemption penalties.
"This re-finance route offers a very low interest rate with minimal set up costs. As the new build is expected to be completed within seven months, the excess finance raised can earn interest in the clients’ savings accounts and can be withdrawn, when needed, for the build. Once built, the house can be refinanced in its own right and the funds used to pay off Coventry BS. They will also be free at this stage to sell their current home without penalty.”
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