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Q) I've embarked on a self-build project, but the cost has just increased. I purchased land with detailed planning permission and have just been granted Building Regulations, which stipulate that I build with different materials from those I had originally planned to use. Sadly it transpires that the materials may be more expensive than I had originally budgeted for. The site survey has also identified a few areas of concern. I now feel that I don't have the skills to project manage the build myself and I also know that I cannot build to my original budget. Who can help me and how can I increase my mortgage facility?
A) You may not want to hear this, but you'll be amazed at the number of people who have had similar problems. I strongly suggest that you get in touch with either a project manager or a building contractor. Set out your stall at an early stage and discuss with them the level of involvement you wish to have during the build, and the role you would wish the project manager or building contractor to undertake. This will enable either party to provide you with the cost of their services. Once you've identified the professional you want to engage, it is in your interest to state that ultimately you need to receive a detailed breakdown of the build materials and labour costs with a view to working on a fixed price contract basis. Generally, lending institutions prefer you to work on a fixed price contract particularly in this case where you are asking to borrow more funds than previously approved.
If you've already secured funding against the land, speak with your current mortgage provider. You will be asked to demonstrate the updated build costs in detail and whether you have a fixed price contract. In effect, you are asking for a further advance and this may be a costly exercise as you are likely to incur additional fees from the lending institution and the valuation department. Subject to your income, affordability and the updated valuation report meeting the lender's underwriting criteria, it may be possible to have additional funds granted. The further advance may be over the same term as your existing self-build mortgage or you may wish to borrow the additional money over a shorter term.
Another option may be to re-finance your current lending facility and borrow additional funds by applying for all monies from another provider. Again, you will incur additional fees, as this will be processed as a new application. Make sure you read the original Offer of Advance document to check if you will incur early redemption penalty costs if you re-finance your current mortgage. Check your original facility as lending criteria may have been amended since your original application was submitted.
Another option that would certainly be beneficial would be to consult a self-build/stage release mortgage specialist who will be able to discuss the options open to you.
And finally, once you've resolved the finances and your build is under way, and at the risk of stating the obvious, don't be afraid to negotiate the cost of your build materials.
If you’ve encountered a similar hitch on your project, The Selfbuilder would really like you to share your experiences. Get in touch and let us know how you solved the problem.
Mary Riley Solutions
07808 094 014