Self Build mortgage - direct labour

H

hanorac

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How do these work?

I have a site, freebie from my dad and I want to borrow x amount to build (lets say the cost of the build) And money we have we want to keep to do the house up.

How do the banks etc release money? Can we get some up front or do we have to crack on with some work first?
 
We did this with NIB, We had to have our architect draw down the stage payments. He drew up a schedule of progress and costs and then we could draw down the money as and when needed.

We paid for our site out of oue own money and then could draw down money immediately to commence work.
 
Hey Hanorac,

I am currently undergoing a self build direct labour scenario as yourself, unlike you i have purchased the site and the way it will work for me is that i will get 92% of the value of the site and 100% the value of the construction, which shall be released in stage payments (drawn down) as the building work progresses, which means you will only be paying back on the value of money you have drawn down.
 
Because you aleready own the site you can draw down money as soon as your mortgage is in place. You should be able to release 80%-90% of the site value upfront, depending on which lender you go to. You can draw down money in stages (stage payments) as required and you start paying your mortgage on each stage that you draw down.
 
Helen,

A quick question for you a little aside from this thread, When i purcahse my site i will hopefully recieve 92% of the value this means i will have to come up with the further 8% myself. So once i start building i will probably have to fund the construction up to sub floor level before i recieve my first stage payments is this correct?
 
Yes Jollyman, as you don't already own the site you will have to fund some of the construction initially.
 
Thanks Helen,

So what really has to be done is prepare an estimate and schedule of costs broken down into varoius stages, issue this to the bank and gain approval and sign off by engineer/Architect as the building progreses in its stages. And draw down your payments in lieu of this. So would you be drawing down the value of works to sub level on completeion and using this money for you external blockwork structure before recieving another payment for that on completeion. Meaning that you are always one payment behind the construction schedule? Sorry if this is not your area of expertise but appreciate all your comments.

Regards,
Jollyman
 
Your supervising architect/engineer will submit a 'six point letter' to the lender, giving undertakings and outlining the cost of construction. They don't usually look for a full breakdown of costs.

At each stage of construction the supervising architect/engineer will complete a stage payment cert, confirming the stage of construction and requesting the release of x amount. They can request enough money to cover the stage of construction to date and extra towards the next stage but realistically you will need your own funds up front (unless you can put off suppliers etc).
 
Does this person have to be an architect or engineer? Or can i complete this myself as a qualified qs?
 
I don't know if they will look for 'independent' confirmation but you could check with your lender. Also they will insist that whoever signs off the stage payment certs has professional indemnity.
 
As far as i know they will not check Helen shold be able to confirm this.

I am covered with professional indeminity insurance. Ill check it out thanks helen
 
No hanorac, the don't check. Once the architect/engineer signs off the stage payment cert, that is all they require to release the money.

Jolly Man, can I ask you which lender you decided to go with?
 
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