Advice on how drawdowns for build work

[micheller]

Hi All,

I'm hoping someone can help answer a few questions for me!
Many Thanks in advance:

We are hoping to take out a mortgage to build. We will own the site.
Once the mortgage is okayed, how do we drawdown to begin paying for things?

Can we draw it down into our own accounts or through the solicitor?
I'd rather not use our engineer or builder.
What are the ways I can go about this each time I need an amount?

Thanks as always,
Michelle.

 

[Kevin Brod]

Depends which Lender you go with.

General Idea is:

If you own the site you will be allowed to borrow 100% of the cost of construction subject to the overall borrowing not exceeding 92% of the completed value of the house (assuming your salary can cover this amount)

You'll need an architect\ builder to supervise the construction and to certify the build and pouring of the foundations.

To get your loan offer you'll need to submit planning permission, 6 point letter + PI insurance and costings.

The 6 point letter from the architect\builder will layout each stage eg

Stage 1 30k
Stage 2 20k
Stage 3 45k
Stage 4 10k.

Either you, your solicitor , your builder will submit a 1 one page document called a "stage payment cert" to request the funds at each stage.

This has to be stamped and certified from the architect\builder each time.

Once drawn down you start paying interest on that amount.

The Lenders usually hold a retention amount for the final stage until a final valuation is submitted.

I assume the first drawndown is done through the solicitors account and forwarded to the builder. Subsequent draw downs are probably sent to a designated account.

 

[micheller]

Thank you so much for that- was finding it difficult to get a handle on the whole thing, cheers