Obtaining early financial advice is a must when it comes to custom building your dream home. Wow! what a way to start a blog on dream homes. The excitement must be coursing through your veins to hear that gem of advice.
The problem with this part of the process of custom build is that it’s just not that much fun compared to designing and site finding and watching your dream come to life. However without the mortgage, for most, the dream cannot become reality. The advice is to focus on the end product. Our guides will stick to the serious stuff but if all else fails I am reminded that mortgages are only exciting when you get the offer letter.
So my advice is to get a figure down on paper that reflects your realistic next move. More on that later but don’t think about the mortgage itself. The guy in the suit can take care of this and we know plenty of good ones should you want one!
Once you have this figure, this will represent one of the key elements of your dream home (well done!) and at this early stage can be realistic without any need to get a quantity surveyor or architect to give you detailed cost or breakdowns of the work.
At this stage you will feel like David Attenborough, trying to discover that rarest of creatures, the mortgage broker who has some time. And despite this we don’t necessarily help them. They receive hundreds of enquiries along the lines of “I’ve got this plan”, and nothing more. Do yourself a favour and rather than asking them what you can have, present them with the simple fundamental question..”If I am doing this (*) what should I do in order to achieve my (dream) home.”
Getting ready and making sure you can deliver is the key.
To start with you need to assess how much money you have and how much you will need to borrow. As a rule of thumb you should be looking at your current situation as to what you can afford and as I said before if you are approaching an advisor then use the next move as an example. If your custom bill is 10 to 15% cheaper it will be an ideal contingency figure. The mortgage advisor is going to be able to assess the needs of the lender who will want to analyse and know your financial situation, your income and affordability and what you are going to need to find yourself.
There are number of products on the marketplace and this is where communication is key with your team. Ensuring your team understands the financial constraints will help when you build in the terms of your mortgage release into your contracts with them. For example if your mortgage offer draws the funds down, monthly in arrears, then the last thing you want is a misunderstanding on payment or a funders valuation falling short of expectation. Timing is critical.
If you are ready to make your application you should also check with your advisor that they have all the information they need. It’s always a good idea to be proactive with all your information. Be prepared to handover plans, costs, cash flows, permissions and proposed warranties including your 10-year structural warranty.
Finally within your plans you should consider looking at the exit. The self build mortgage is not a lifetime mortgage and once your home is finished then you will need to consider what happens next. Again your mortgage advisor will be able to assist but your exit should be the longer term financial goal.