Buying house with development potential?

A

AJD

Guest
Hi, We are interested in buying a house that has a very large garden and we are thinking of maybe building a house in back garden and selling it. House next door has done this, so planning should not be an issue. We have no experience of developing, so we would appreciate if people could give us some advice?
Also what is the best way of financing this? Will banks finance the purchase price + costs of development? Ideally we would like to do interest only until we could get house built and sold.
 
Get an architect to view the property to verify that there should be no problem getting planning.
 
Couple of issues arise.

Re the financing the main thing that interests the bank is your ability to make repayments if you can do that you're sorted. Be prepared before you go in, it's is worth having a good plan put together, have your figures ready (stress testing will impress the hell out of them). It is worth your while getting to know the Mortgage Officer in your bank, if they can see the merits of what you are proposing they will go to bat for you with the people actually making the decision (usually a central office). Log on to any mortgage calculator and you will be able to calculate repayments for different interest rates.

Make sure you include all costs as it looks amature to be reminded to include the obvious (legal fees, stamp duty etc).

Interest only is not usually a problem, however in my experience the mortgage officer may not have to deal with then too often and you might have to take them step by step through the process (believe it or not).

If you have not done much work of this kind before you need to seriously consider using a professional unless you are really confident of your ability. You can learn from them and use what you learn in future projects. In general, I have found that any time that I do a job "to save money", I nearly always spend more and take take three times as long.

Other issues for the site:

Rights of way/access to the highway?
Access to utilities (can cost)
etc. etc.
 
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