Key Post: Self-build mortgage

M

murray

Guest
We are in the process of arranging a mortgage for a self-build house. We've been told by a broker that we might be entitled to a preferential interest rate as we own our site and the full value of the completed house will be 60% more than what we are borrowing.
We have never heard of this and need to know what the advantages and disadvantages of this might be.
Also our broker offers legal services for conveyancing, however we are unsure as to what legal services are required for a self-build mortgage when we already own the site.
Any advice?
 
self-build mortgage

> We've been told by a broker that we might be entitled to a preferential interest rate as we own our site and the full value of the completed house will be 60% more than what we are borrowing.

Not sure if ownership of the site counts specifically but many lenders offer preferential rates to borrowers who are looking for a lower than normal loan to value ratio (the amount of the loan required expressed as a percentage of the house value). See the mortgage best buys and list of trackers for example:

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


> We have never heard of this and need to know what the advantages and disadvantages of this might be.

Nothing devious - if you borrow a low LTV (e.g. < 40% or < 60%) then some lenders offer preferantial rates. That's all.

> Also our broker offers legal services for conveyancing, however we are unsure as to what legal services are required for a self-build mortgage when we already own the site.

I think that there are still legal/convevancing issues to be dealt with even if you own the site so you will probably still need a solicitor.

What sort of "broker" is this? Are they an Authorised Advisor, a multi-agency intermediary or a tied agent? And what are they claiming to be able to sort out for you? I would have thought that if they were any good then they could answer these questions directly? Have you considered shopping around for the required services and products (mortgage, mortgage protection life assurance, house insurance, conveyancing solicitor etc.) yourself?
 
mortgage

thanks for the reply. The broker is a reputable independent broker and we haven't had a chance to question him about the above, but we will and also we will definitely check out our options independently of any broker.
 
site

Be careful with brokers, they asked us for a much bigger deposit for our site than the EBS asked for. When I asked them why they needed so much money they couldn't explain, so I dealt directly with the EBS. Also, they were trying to do me - so be careful.
 
Brokers

You say that

"Also our broker offers legal services for conveyancing"

If the brokers are also solicitors (rare, but there are a few) well and good.

However, if they are merely arranging to pass your work to a solicitor of their choosing, then why not just get a solicitor yourself? Do you think that the broker has shopped around on your behalf? Is it perhaps more likely that he/she simply has some sort of an arrangement to direct business toward a particular solicitor? If so, is it likely that this is mainly in your interest or mainly in the broker's interest?
 
site

The broker we went to recommended said first active were offering us the best deal, but when i shopped around myself they were nearly one of the most expensive. They were also looking for an unrealistic deposit on the site. Anybody i know that has got a mortgage with this broker, the broker has gone with the same lending institution. I think it may have something to do with commission and nothing to do with the best rates (as i found out for myself).
 
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