Starting build without mortgage in place

SelfBuild2019

Hi all,

We are building a house and have applied for a mortgage with both BOI & AIB through our broker, and are almost over the line with both. Thankfully our incomes haven't been affected, and our jobs are safe.

Obviously with everything going on, things are taking slightly longer to get over the line. Both banks differ in how they do things, in that BOI have issued us a letter of offer subject to valuation, and AIB have to do their valuation prior to issuing a letter of offer. AIB have thankfully given us the value we need, and we are now just waiting on the final letter of offer from them. BOI's valuer has actually given a low valuation, so our broker has requested a 2nd valuer to visit the site, and we're hopeful he will give us the required valuation. It is up to us then to choose who we go with.

Our broker is an extremely cautious guy, and said we shouldn't have the builders start without having the final letter of offer issued. We are eager to have our builders start on the 18th, so my question is am I mad if I give him the nod without having the final letter in my hand? First drawdown and payment will be required approx 4-6 weeks into the build, and I'm very confident that everything will be in place by then. I may have both letters of offer in my hand late next week, and this query may be pointless, but I'd be interested to know what other self-builders have done

Marcusm

It’s not about the first drawdown though, it’s about the last one! Surprised, given how builders are so busy, that they haven’t asked you to have the finance in place to pay them on time as the build progresses. That would be the norm and the best for all of you.

listermint

Ya starting building with no finance worked out in full has always worked out for everyone that I've seen do it....


... Not.


It would be absolutely insane to do this unless your swimming in money. Even then you'd only do it if you didn't care about the money you had.

Jim2007

SelfBuild2019 wrote: »

Our broker is an extremely cautious guy, and said we shouldn't have the builders start without having the final letter of offer issued.

He is the one with the experience, knows the players and probably has good reasons be cautious.... you have no experience... where it the point of having an agent help you, if you ignore his advice???

mickdw

Only attempt to start if you can self fund that stage and pay builder as agreed.
In general i would say if self building possibly go ahead with foundation works if you can fund that.
If getting a contracfor on site for the whole build, no way should you do that without the funds signed off, more so now in the times we are in. You have not got the mortgage yet. The banks may well suddenly change their lending criteria due to covid and could put a spanner in tbe works for you.
I certify new builds and ive a few clients mid self builds and im not so sure the money will flow so easily for next stage payments.
Banks got very hard to deal with during last recession. Changed property values made for a get out clause for banks.

I personally don’t see a problem with it, we fully intend to start our selfbuild as soon as we get planning, we likely won’t even have applied for a mortgage by then as my wife will be starting a new job so won’t passed probation.

Spoke to banks about it and Ulster bank in particular have no issue, will count any work done towards the deposit. This is important though: We are doing direct labour so we will have more control over things and will only be paying individual trades people not be on the hook for a payment to a builder. How far we will go I’m not sure at the very least put in foundations and possibly get the block laying started also.

If we wait until we have the mortgage approved it’s just going to take too long, things already delayed blandly with covid should have planning got not trying to get the application in. Could get started maybe autumn if using cash to start the build vs this time next year if waiting for a mortgage approval.

Victor

SelfBuild2019 wrote: »

We are eager to have our builders start on the 18th, so my question is am I mad if I give him the nod without having the final letter in my hand?

Why the 18th?

What will you do when the contractor sits down with you and has the grown up chat of 'how are you funding this'?

Realise that you are not only putting yourself out there at risk of bankruptcy, you are also putting the contractor(s) out there.

mickdw

Eduardo Dry Magnum wrote: »

I personally don’t see a problem with it, we fully intend to start our selfbuild as soon as we get planning, we likely won’t even have applied for a mortgage by then as my wife will be starting a new job so won’t passed probation.

Spoke to banks about it and Ulster bank in particular have no issue, will count any work done towards the deposit. This is important though: We are doing direct labour so we will have more control over things and will only be paying individual trades people not be on the hook for a payment to a builder. How far we will go I’m not sure at the very least put in foundations and possibly get the block laying started also.

If we wait until we have the mortgage approved it’s just going to take too long, things already delayed blandly with covid should have planning got not trying to get the application in. Could get started maybe autumn if using cash to start the build vs this time next year if waiting for a mortgage approval.

Be sure to do your Building control Paperwork correctly and have your Engineer on board before starting.

mickdw

mickdw wrote: »

Be sure to do your Building control Paperwork correctly and have your Engineer on board before starting.

Will be keeping my architect on as the engineer so that’s already sorted. He has been on top of any paper work so far specific to the area/location etc so he will advise me on what’s needed.

I worked in buildings a good bit during college so I’m comfortable project managing the build, have friends or family friends or people who have done work on my parents house or on the farm lined up for most of the trades also.

SelfBuild2019

We’ve sent in the final couple of bits today, up to date Payslip’s etc, so hopefully on the final stretch. If we get the offer letter this week, even though we still need to sign it with our solicitor etc, would people think we are OK to give our builder the go ahead to start on Monday?