For some people looking to buy their new home, the second hand market just isn’t quite right. Wouldn’t it be nice if we all could build our family home exactly the way we want it? The problem often lies in obtaining finance for a self build mortgage for self employed individuals.
For the lucky few that are able to do this having the right finance in place is key. This usually comes hand in hand with having the right contacts and knowledge. This is where having a broker to broke the deal can not only save you time but can also save you a lot of money.
Just recently one of my clients agreed a purchase of a property valued at £1 million. He came to me with a view to knocking down the existing property and building a brand new property in its place.
From his research, once the build was finished he would then be left with a property that would be valued at £2.2 million and a stunning family home. The problem that he faced apart from his inexperience as a developer was that most lenders didn’t like the fact that he would be knocking the existing property down; they would rather the purchase of a flat piece of land.
I managed to place this deal with one of my contacts within a building society. They were able to take a sensible underwriting approach whereby they were able to see the potential within the project.
My first hurdle to overcome was income. My client had recently gone from a sole trader to a limited company as he had expanded globally, meaning that his profits had increased dramatically in the last year. Therefore his 2 year average was lower than his previous year’s income. With the help of projections and future contracts I was able to satisfy the lender.
The deal that then followed was a 50% loan to value purchase, meaning that my client had to put down £500k as a deposit in order to buy the property. The lender then funded a further £500k which would be used to fund the works. This particular product had the benefit of no early repayment charges meaning that once the property was completed he would then be free to remortgage onto a normal high street product. This deal was only possible as I was able to speak directly with underwriters who were able to take a sensible view as opposed to the computer simply saying no. My client is currently 6 months into his build.