Part Build from cashflow or overpay mortgage.

[bteaquestion]

Pretty self explanatory, But my partner and I are planning to commence our self build in the next 12 months, As im a tradesman, i will be doing a large portion of the work myself. As we have our own site, we dont require the 10% deposit for the mortgage, although we are saving as if we did. Question is, would we be better off commencing the build from cashflow, and then drawing down our mortgage, or are we better off drawing down the mortgage day dot and using the cash we've saved to overpay our mortgage repayments. Thanks

 

[skrooge]

This isn't based on experience of anything like that but ... Personally I'd rely on the mortgage as much as possible and treat my cash as insurance in case there are additional costs that were not planned for.

If you under borrow you could face having to reapply for a larger mortgage. That could be time consuming, delay construction and there would be no guarantee you'd be approved for the extra amount.

Over borrowing and paying it back from savings you had will be a little more expensive due to higher mortgage repayments. But only for the period of construction.

It's a personal choice but I'd see that as a small price to pay for a less stressful build.

 

[Monbretia]

Have you the mortgage in place and ready to go? If not then I wouldn't start with what money you have and apply for a mortgage when you need more, make sure the mortgage is ready to go before you start building, it can be more difficult to get one once you have started just from complying with a banks paperwork point of view, better to know at the beginning and have it all in place.

Other than that it's much of a muchness, personally I like to get initial draw down done at least even if not needed just to ensure it all goes through smoothly!