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Loan sources

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 henwardian 12 Jun 2022

I'm trying to finance building a house in the next few months (just erection to weathertight at this stage). It looks like I'm going to be a bit short of cash and I'm wondering what sources might be out there that I'm not aware of. I'm thinking about something in the £20k to £50k range.

I've got a company which makes good money but has only been making revenue for the last 12 months. There is a big director's loan so any company-based financial product that can be used to "refinance a loan" could be a candidate.

I don't want to get a self-build mortgage because they are very costly, the money only arrives after a stage is finished (problematic) and there is a lot of additional complexity with signing off stages with an architect.

Higher interest rates are not necessarily a deal-breaker because I intend to be able to pay it off mostly or completely in about a year but obvious rip-your-face-off deals like a simple google search throws up with the words "49% apr" hidden in the tiny text are an obvious no-no.

I'd want something that can be paid off early without too big a penalty.

I'm wary of anything involving credit cards for a sum this big.

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In reply to henwardian:

I would discount credit cards completely. If you are looking to settle within a year there are some good introductory rates available.

If the deal is limited to purchases then arrange to buy the materials with your cc and pay labour costs via a different source?

Or pay a % upfront and balance transfer.

Be disciplined to settle before the offer period runs out. 

OP henwardian 12 Jun 2022
In reply to Presley Whippet:

Hmm. I hadn't thought my way round to those 0% offers. I guess that could form a part of it, it's just I rather assume that they'd want to start you off on £200 or £2000 but not £20 000.

Edit: Just checked my current card and it's only £2500 and when I clicked "raise the limit", it asked a few questions and then told me to get lost. So not feeling too confident about the creditcard solution!

Post edited at 17:03
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 deanr 12 Jun 2022
In reply to henwardian: I think you need a Development Loan. Specifically designed for financing builds. They pay you the money in instalments and you only pay it back when the build is complete at which point you can get a mortgage 

OP henwardian 12 Jun 2022
In reply to deanr:

> I think you need a Development Loan. Specifically designed for financing builds. They pay you the money in instalments and you only pay it back when the build is complete at which point you can get a mortgage 

Hmm, I've not heard of this type of loan before. Is this the sort of thing you are meaning?

https://www.natwest.com/business/loans-and-finance/real-estate-finance/residential-property-development.html

I sort of sounds like it is the kind of loan you get when you are a construction business building a house that is for sale when it is complete... Maybe something I need to phone them about to work out if it would work for me.

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In reply to henwardian:

No idea of details but look at the Ecology Building Society. They specialise in selfbuild, I think. Thy are also small, so may be flexible if you talk to them.

 deanr 12 Jun 2022
In reply to henwardian: that’s it. I’ve not done it yet, but am planning on developing a plot on my land. I spoke to the first company that came up in the Google search and they were pretty helpful. Once I have got my architect to draw up full plans and have appointed a builder I’ll start phoning round for quotes. 

 deanr 12 Jun 2022
In reply to henwardian: that’s it. I’ve not done it yet, but am planning on developing a plot on my land. I spoke to the first company that came up in the Google search and they were pretty helpful. Once I have got my architect to draw up full plans and have appointed a builder I’ll start phoning round for quotes. 

OP henwardian 13 Jun 2022
In reply to MG:

Thanks. I'll give them a call and see what they have to say

OP henwardian 13 Jun 2022
In reply to deanr:

Hmm, you are doing things a bit differently from me. I'm only aiming to get to the weathertight stage in this first building spurt, then the rest of the inside stuff will be done as income becomes available next summer/autumn and I'm the project manager rather than employing a builder to do the whole thing.

In reply to MG:

> No idea of details but look at the Ecology Building Society. They specialise in selfbuild, I think. Thy are also small, so may be flexible if you talk to them.

I have a mortgage with Ecology. You'll need to be able to fund at least part of the build yourself (at least about 20% of the build costs) as the mortgage funds are released in stages, but for the specific numbers you'll need to get in touch. You will also need to satisfy certain energy efficiency criteria for Ecology to be interested.


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