Buying a site for new build - bank says all savings must go to purchase site.

H

help_me1

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Hi we are mortgage approved and we have recently received planning permission. The bank is now saying that we must use all our savings (80k) to purchase the site. That will leave us with nothing for council, solicitor architect fees etc. They tell us this is the norm now? Is this true? We want to pay part of site with our savings and part with a mortgage. Thanks
 
Change your bank.

Unless this was explicitly discussed during the application period and is part of the terms and conditions I doubt they have any business telling you what to do.

We have heard reports that the banks are not paying final mortgage payments based on a review of the falling "value" of the completed property vs the loan amount.

Loan amounts which start at 80% can be driven above this - under normal circumstances this would attract a form of insurance, but our dysfunctional banks are simply reneging on their undertaking to yield a mortgage.

This is an important matter and you should retain a solicitor to read the fine print for you and report.
 
Is it a problem if you have to? Most loan offers we see for self-builds state that your own money must be used up front.

Your solicitor and architect may well wait to be paid from the first stage payment- and you could probably come to some agreement with the council too.

Talk to the solicitor about how the stage payments are structured in the loan offer. I don't see this as insurmountable.
 
My advice to you would be to tell the bank that you are not keen on that arrangement and propose your own. Explain to them why such a condition doesn't suit you and request it to be appealed through the banks internal appeals system. In my experience they'll usually compromise, even in the current climate.

The biggest problem is communication. The faceless person calling the shots on your application is sitting in a head office lending department who then sends your local branch manager out to bat !! Chinese whispers and all that goes with it.
 
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