# Key Post: SelfBuild Morgage Question.



## Elcato (26 Aug 2004)

I have 2 mortgage questions that are confusing me.

Situation:
In the middle of Buying site for 80k.
Savings of 8k (Currently with solicitor as deposit on site)
Required Mortgage - 234k (90%)
Getting letter of gift from folks for rest of deposit but really plan to save rest of 10% (26k - 9K = 17k) over the next 15 months while paying mortgage on 72k (Site drawdown).


Conditions:
Due to the lack of Deposit, and the fact that we dont want to start building till 1 - 1.5 yrs down the line, and the required 234k mortgage, we have little choice but to go with EBS .


EBS standard Variable APR is 3.3% (I think) - I know there are better ones out there but EBS suit cause of conditions above.
FA came close (current account mortgage) but heard that you can't go to fixed from it, and have read some bad reviews on it.  I think the APRs on the current account are high anyway.


Q1. If the mortgage 90 % + Deposit 10 % = 260k, but when the house is built it's valued at 330k 
How is 
Is the LTV ( 234/330 ) * 100 = 71%
Ie - How is the LTV calculated ?  
Or put another way - should I be looking for a lower rate than 3.3% apr ?


Q2.  The fact that there's not going to be a house of the site for 2-3 yrs, will I have to pay house insurance/ will the bank require me to pay house insurance from the start - even though there's no house there ?
Same question when it comes to the Value of the life Assurance ?
Anyone done this before ? How did you work it?


Q3.  I would really appreciate any all round advice about any other options than EBS ?
I'd like the lowest rate possible, but I seem to be in a  not so normal situation with the selfbuild, Lack of deposit, and amount needed.


Any advice is appreciated,
Regards,
FDH


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## Guest (26 Aug 2004)

*SelfBuild Morgage Question.*

> Ie - How is the LTV calculated ? 

Obviously for a standard property the LTV at the time of purchase/mortgage approval is (loan amount / market value) expressed as a percentage. However where the property has yet to be renovated or built then I don't know how lenders generally approach this. Whatever about the details don't be afraid to haggle for the best deal possible one way or another.

> will I have to pay house insurance/ will the bank require me to pay house insurance from the start - even though there's no house there ?

As far as I know you will need some sort of insurance in place to cover the development/renovation of the property including public liability etc. This is completely different to the sort of buildings/contents insurance that you take out once the property is completed and occupied. Your lender will presumably insist on the former while the development is ongoing. 

> Same question when it comes to the Value of the life Assurance ?

As far as I know the lender will require mortgage protection life assurance for the full loan amount from the time that the initial stage payment is drawn down.



> Anyone done this before ? How did you work it?

Are these topics of any use?




> Q3. I would really appreciate any all round advice about any other options than EBS ?

You mentioned "other issues" with the mortgage application that may limit your options but in general it makes sense to shop around on price (interest rate charged) and, if you can afford fluctuating repayments, go for the best value tracker rate available to you:

www.askaboutmoney.com/clu...#MORTGAGES


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## FDH (31 Aug 2004)

*LTV for house that isn't built yet.*

Thanks Anon,

Has anyone else come across this :

Self Build, first drawdown is for the site, so I'll have to pay repayments from then on.

If I don't know what the Market Value of a house that hasn't been built yet, then how do I know that (3.3% EBS APR or 90% LTV Rates) are the best I can do.
What is LTV value ?  


I THINK ANON's DESCRIPTION EXPLAINS IT BETTER:

Quote:

Obviously for a standard property the LTV at the time of purchase/mortgage approval is (loan amount / market value) expressed as a percentage. However where the property has yet to be built then I don't know how lenders generally approach this. Whatever about the details don't be afraid to haggle for the best deal possible one way or another.


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## Browser (31 Aug 2004)

*SelfBuild Morgage Question.*

"Q1. If the mortgage 90 % + Deposit 10 % = 260k, but when the house is built it's valued at 330k 
How is 
Is the LTV ( 234/330 ) * 100 = 71%
Ie - How is the LTV calculated ? 
Or put another way - should I be looking for a lower rate than 3.3% apr ?"

When you approach EBS - they will insist on a valuation to be on the site, they will also get a valuer to give a valuation based on the location of the ste and the plans of the house to be built.

So basically, your LTV is based on the valuers opinion on what the house would be worth on completion.


"Q2. The fact that there's not going to be a house of the site for 2-3 yrs, will I have to pay house insurance/ will the bank require me to pay house insurance from the start - even though there's no house there ?
Same question when it comes to the Value of the life Assurance ?
Anyone done this before ? How did you work "

You will need to builing int he course of construction insurance - this doesn't cover a whole lot, but you will have to have it to keep EBS happy- some insurers will cover year by year - others will cover for up to 2 years for the same as 6 months, depending on when the house is finished.

Life assurance - you will have to have cover in place for the Full Mortgage Amount from day 1 for the duration of the loan - i.e. €234k for 25 years of however long

Browser


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