Loan for buying a site

M

mary78

Guest
I currently own a house valued at 430,000. I still owe 178,000 on this. I have a First Active offset mortgage. Just wondering does anyone know if I can top up this mortgage by say 120,000 in order to buy another site i.e. I will then owe the bank 298,000 on my house but will also have bought a site. My plan is to buy a site, get planning, sell my house and build another house on the new site and hopefully get rid of most of my mortgage. Any info would be greatly appreciated. Thanks
 
Banks generally don't ask what the loan is for if you get a top up loan.
This is the case with permanent tsb anyway.

Your home provides the collateral so it's risk for for them.
 
It is possible to do this if you can afford the repayments.

How is the offset mortgage working for you?
have you managed to keep your repayments down by much?

Rob
 
Yes, that will be no problem Mary. I've done the same myself in the past. Just make sure you will be able to get planning permission to build before you commit yourself.
 
You can top up that mortgage without legal cost but you will most certainly be asked what it is for, this is due to moneylaundering legislation. Small top ups dont matter but a large amount like that, use will probably have to be verified by letter from solicitor dealing with site purchase which presumably is not a problem.
 
Chances are that you would actually pay legal costs for the top up mortgage, and it would be a similar cost to remortgaging, so I advise looking around the market to secure the best rate.
It would not be a problem releasing equity on your home to purchase land.
 
Bobk - whether the OP would incur legal costs is down to the policy of the lender and the amount of top up required.
It is simply not true to say that it will be no problem to top up the loan for the purpose of buying a site. All lenders require a detailed explanation of the purpose of the funds required and, I would suggest that many lenders would not look at speculative land purchase as a prudent investment in the current maket
 
Mortgageman said:
Bobk - whether the OP would incur legal costs is down to the policy of the lender and the amount of top up required.
It is simply not true to say that it will be no problem to top up the loan for the purpose of buying a site. All lenders require a detailed explanation of the purpose of the funds required and, I would suggest that many lenders would not look at speculative land purchase as a prudent investment in the current maket
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I doubt if there would be a problem for the op if she can satisfy affordability criteria. Security wise I dont see a problem either, new LTV is around 70% on ppr alone and around 55% if you include the site value.
 
I accept your point in general. However, none of us know whether OP will satisfy afforadability criteria - hence my objection to previous posters assertion that getting a top up would be no problem
 
Just to clarify, my response was answering the OP question of whether it is possible to buy a site in this way. It is. Whether or not the OP can afford they repayments is a totally different matter, one for which he/she did not request advice.
 
Mortgageman said:
I accept your point in general. However, none of us know whether OP will satisfy afforadability criteria - hence my objection to previous posters assertion that getting a top up would be no problem
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My first reply to the OP related specifically to affordability.

My second reply related to legal fees, I do not think First Active would give a top up of that amount without incurring costs.

It had also already been addressed that the OP should be certain that planning permission would be granted before committing to the purchase.

OP is buying the land for a new PDH not investment purposes.

On this basis, pretty much all lenders would not have a problem in providing finance.
 
"OP is buying the land for a new PDH not investment purposes.

On this basis, pretty much all lenders would not have a problem in providing finance."

Don't mean to split hairs but many lenders specifically do not lend for self builds.
 
Mortgageman said:
Don't mean to split hairs but many lenders specifically do not lend for self builds.
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It wouldn't have to be a 'self build' mortgage if they are getting an equity release on their existing home to finance it.

So all lenders would consider it on a simple LTV & affordability basis.
 
While your post is technically correct, the OP specifically stated that he/she wants to build a house on the land. This would obviously require mortgage finance - this is my point.
 
The OP also states that she is going to sell her house before she builds
 
I think it is reasonable to suggest that existing property would be sold at the end of the process not in the middle.
While I have no intention of debating with you on this issue, I believe that any information provided by the OP was for the purpose of receiving advice - any advice given should in my opinion take all information provided into account instead of answering the question in a technically correct fashion but ignoring the context in which it was asked.
 
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