Do you have savings ? If not, you probably should solve this problem first
before consider any move.
In answer to your first question, if you sell this house for less than 340K. the bank will insist that you pay off the debt in full, immediately.
The only way that you might be able to fund your move, is if the site belonged to you, and you were able to mortgage it, to fund the shortfall in the first mortgage.
If you intend getting a mortgage to self build with stage payments, you do need
money to get the building started. Also, you will need to service the mortgage on
the site, and pay rent, while you build.
I have no idea what your income is, any how much of a mortgage you would be
considered for now, but this plan does not seem feasible without savings.