Getting final self build mortgage drawdown- any probems?

N

ND27

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New to the forum, and have just moved into our self-built home and are in the middle of getting all the documentation together to submit to our bank (AIB) to get the final 10% mortgage drawdown.

Has anyone here had any problems with getting the final amount through? We are very nervous about it... the market is in turmoil and we afraid the bank might not agree with the final valuation (even though the valuer has the evidence to support the valuation).. has anyone had problems here where it was sent back for whatever reason? If so, how did you overcome it?
 
Building a house is not the same as getting a valuation on the property.

A house is built for a contract price + site purchase cost.

A house is valued at - or slightly above - what the market will bear.

The draw down for the mortgage was surely based on your building contract costs?
 
Hi ONQ,

It might help if i give more info- our mortgage was for the building cost + site cost (there was an old cottage on the site which we recieved PP to demolish and build the new house on the site) and was originally at 80% LTV. The costs and site valuation were done up in May 2010).
However we've been informed that the value of the site has dropped since, meaning the overall value of the now built house plus site is less than the original value submitted... its now at 92% LTV.

I guess what I'm trying to find out if anyone has had problems with the difference in the value from their bank?

I'm very green in this matter and need advice!
 
onq said:
The draw down for the mortgage was surely based on your building contract costs?
Click to expand...

Draw down will be based on market value not build costs.

It's of no use to the lender if the building cost 300k but they can only sell it for 250k.

I have heard of lenders refusing to release the final stage payment due to a fall in market value, no personal experience of it though.
 
My limited Googling suggests that 80% LTV is something of a watershed, above which percentage (in other jurisdictions) "private mortgage insurance " may be sought.

http://en.wikipedia.org/wiki/Loan-to-value_ratio

You may already have availed of such insurance - otherwise you may be able to negotiate a review where you take out such insurance if it is available and acceptable.

This is about two things - risk management and completion.

If banks are refusing to allow final draw downs based on changing market valuation and no other criteria (such as changing employment situation), then I think the matter should be referred to the financial ombudsman.
 
Thanks ONQ- i think I will contact the ombudsman anyway to see what they say in advance of anything happening. I'll post any additional info I get back here... would still like to here if anyone else out there has heard anything on this matter?
 
Hi ND27, just wondering if you had any joy with your final draw down. Am in similar situation myself. Both working in steady jobs and had to put alot of our own savings into final build cost to bridge build cost gap due to poor LTV from inital valuation. Waiting on final valuation for 10% draw down to pay off remaining costs, am sure market value has dropped as nationally prices have dropped by 15% over the past year. But
isn't the final valuation to ensure that all money was spent per initial costings?
 
I have a similar issue but my problem is i have no savings to finish the last part of the build (it over run and we used some of our money for this), no one will value the house anymore unless your up to the stage of kitchen installed as an estate agent told me banks are after estate agents who have been valuing un-finished houses and its too risky now.

The architect has gone bust and is abroad so would need some one new to sign off. Solicitor and mortgage company are chasing me and want all the docs and the deeds.

I will just take my time and finish the house as im going along, My planning is up 12 months from now, which is where it will get interesting.
 
I'm afraid still no outcome on getting our final 10%... however since I first posted our contact in the bank did advise it should be fine so long as the minimum LTV on the final valuation is 92%.... but she mentioned the supporting evidence i.e. other properties in the area with similiar valuations based on size/spec of site/house needs to be strong as they will check this carefully.... so we got our valuation for 90% and the supporting evidence looks good (to me anyway) so I can only hope by next week I will be posting a message here to say the funds are with my solictor...!
 
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