Where Are You Going to Live During the Works?
Where you intend to live while you build will have an impact on your affordability to borrow monies to build your dream home. For instance, the monthly rental payments or mortgage payments will have an impact on your affordability calculation.
Some lenders will accept you making upfront rental payments, which will not have an impact on your monthly income versus expenditure.
What Build System Do You Plan to Use?
Some lending institutions will not lend on certain types of construction, so do ensure you check with them. Of course, all your design and construction methods will need to be compliant with the current Building Regulations.
Each lender’s criteria are different, but you do need to ensure they are aware of your build type and of the payment terms and conditions your supplier has stipulated.
Do not agree any payment schedule with your builder or suppliers until you know how your lender will release funds to you.
What’s Your Estimated Build Cost?
Some lenders require that you must work to a fixed build cost budget; others may request that a qualified quantity surveyor provides the information on the build costs. Check with your lender what they require. Also, ensure that you include a minimum of a 20% contingency built into your build cost estimate.
In addition, as part of your full project costs and budget control estimate that you provide your lender with, you’ll need to identify (or at the very least estimate) the following costs:
- Land purchase and associated fees
- Project management, including health and safety compliance
- Gaining planning consent, if not already achieved, and associated fees
- Demolition and/or site preparation
- Construction design fees
- Construction costs (preferably estimated against Building Regulations drawings).
You must demonstrate to the lender that you will have sufficient funding ability and competence in place to complete the project.