The post FAQ for policy holders affected by Royal & Sun Alliance’s (RSA) decision to no longer sell home insurance. appeared first on The Loughborough Building Society.
]]>RSA announced on the 7th December 2023, that Intact and RSA have reached an agreement with Admiral Group plc (Admiral) to acquire RSA’s direct Personal Lines MORE THAN Home and Pet businesses. RSA will also exit the remaining personal lines business. Your policy sits within our wider Personal lines business. RSA are no longer underwriting any personal home insurance, this will impact you from your policy end date.
No, the current policy will continue unaffected until the policy end date. You’ll still be able to make changes and claim as normal up until that date. RSA will write to you about your policy and when this will end.
If your policy is cancelled before the policy end date, RSA are unable to reinstate the policy, you’ll need to find alternative cover elsewhere. RSA can only reinstate policies in exceptional circumstances, and you would need to contact RSA to discuss this.
If you made a claim before the policy end date, you should contact RSA about it, and they will be able to help you. RSA will continue to deal with your claim as normal through to resolution. This includes claims that may take a longer time to resolve such as subsidence or storm damage claims. If you have need to claim after the renewal date, you’ll no longer be covered by RSA and will need to contact your new insurer.
If the incident happens before your policy end date, you should report the claim to RSA. If the incident happens after your policy end date, you should report it to your new insurance provider.
No, this is RSA’s decision which does not need to be disclosed as ‘a refusal to offer insurance’. This is not a reflection on you as an individual and affects all our RSA home insurance customers in the same way.
Customers who are struggling to obtain insurance can contact BIBA – BIBA Homepage – British Insurance Brokers’ Association you’ll be able to search online for Home insurance providers and can be contacted by telephone on 0370 950 1790. Alternatively, Loughborough Building Society have an arrangement with Pure Protect Ltd who you can contact for a quote, their details can be found at www.theloughborough.co.uk/life-protection.
We fully understand the customers dissatisfaction however RSA will no longer be offering Personal Home insurance. There isn’t another product available with RSA, you’ll need to find alternative cover.
If you’re having difficulties with payments on your RSA policy, you can contact RSA at 0345 3197070, they’ll be able to assist you with resolving any issues relating to your policy.
The post FAQ for policy holders affected by Royal & Sun Alliance’s (RSA) decision to no longer sell home insurance. appeared first on The Loughborough Building Society.
]]>The post Planning to build your own home appeared first on The Loughborough Building Society.
]]>Your home, your way
Self Build can be a cost-effective way to get your dream home. Around 10% of new homes in the UK are Self Build but most people don’t do the building themselves, they organise the project, hiring professionals to do the design, planning and labour.
Why choose Self Build
Having a say in the design, layout and location of your home is one of the major benefits. Few of us get the chance to influence these factors so there is a lot to think about.
You could save 20% to 40% on the cost of an existing home. The more work you do yourself, the lower the building costs will be but bear in mind the time and effort, especially if you also have another job.
Building your own home can be a rewarding experience, but it’s also a huge commitment that can take a lot of time, money, and resources.
Before you start the process of building your dream home, there are some things you should consider.
The average cost for building a 3-bedroom house ranges from £240k to £365k, so you’ll need to consider how you fund it.
You may be able to get a self-build mortgage with lenders such as Loughborough Building Society. You’ll need a deposit and to be able to fund some of the build from your own resources.
You might find that you’ll need to save a larger deposit in order to secure a mortgage for a self-build property, with mortgage lenders tending to set a lower maximum loan to value (LTV) ratio on self-build mortgages than they would on a standard residential mortgage.
To secure a mortgage with a lender, they’ll need to check you’ll be able to afford the payments as well as your other financial commitments, after all, there may be a time when you’re paying mortgage payments on the self-build mortgage as well as paying for accommodation whilst you’re building.
The amount you can borrow will depend on how much you earn and how much you have in living costs, so take into consideration what you might be able to comfortably afford when starting your self-build journey.
As with a regular residential mortgage, you can arrange an Agreement in Principle (AIP) with a mortgage lender to find out if you’ll be able to borrow the amount required to build your home.
An AIP doesn’t guarantee you can get a mortgage, but it’ll give you an idea of whether a bank or building society would be willing to lend that amount.
Having a contingency fund available of between 10% and 25% of the project cost is also essential in case your project doesn’t go to plan, problems that require extra funds can often start early on in the build. You may also find that the cost of materials may fluctuate over the period of the build.
If you still have the contingency at the end of the build, you could consider upgrading interior finishes or landscaping schemes.
There are many things to consider when building your own home, these include:
All of these tasks require a lot of forward planning and precision project management if you want to keep to time and on budget with your self-build.
Hiring a professional project manager
To help ensure that your project is managed properly, you could consider hiring a professional project manager.
A professional self-build project manager will oversee/procure a building within the budget and time parameters set, they’ll also help save you the job of having to find the main contractor or sort the design etc.
They’ll also oversee health and safety on site, cost control, contracts, and time management.
All these responsibilities demand a good knowledge of finance and construction, which is where self-builders taking on the role themselves can sometimes struggle.
An experienced professional will also have a range of contacts that could save you time sourcing contractors and materials. Their experience will also come in handy when potential issues arise.
Professionals are trained to understand exactly what’s needed to bring the scheme together and can therefore budget accordingly, so you shouldn’t have to worry about the cost of your project going overboard.
While you’ll have little responsibility for day-to-day activities, you’ll still be involved in the decision-making process.
Hiring a project manager will however take 5-8% out of your overall budget, but their experience could be invaluable.
Managing the project, yourself.
If you have the time, the dedication, and experience in managing projects you could consider project managing the self-build yourself to save on money.
Bear in mind that juggling the project management of a self-build project while maintaining a full-time job and family can be extremely stressful, especially if you have limited experience.
If you do decide to go ahead with managing the project yourself, you’ll need to be very organised and plan ahead to ensure that your self-build project keeps to time and the set budget.
Project management tools
It’s a good idea to plan a week-by-week schedule of the build works with your contractor.
Having a schedule of your works which includes the length and scale of each part of the project, will help you plan accordingly and ensure your project stays on the right track.
There are various options to help you plan your self-build project and track your progress and finances, from timetables on spreadsheets to project management software like Trello, Asana and Wrike.
From making checklists to project plans on excel, how you build your plan is entirely up to you.
If you don’t know where to start, something like a Gantt chart can provide you with a simple visual representation of your project schedule.
With a Gantt chart, tasks to be completed are listed down the left-hand column and blocks of time are shaded in the corresponding row to show the start date, finish date and the duration of each task. Additional columns can also be added for budget costs, actual costs and the resources required for each task.
A Gannt Chart template can help get you started.
In order for a project management tool like a Gantt chart to work effectively, it needs to be completed as accurately as possible at the planning stage. To do this, you’ll need to gather as much information as possible. If items are missed or an unrealistic schedule is set, the project will be destined for problems before it even gets underway.
Ideally when planning you need to identify what needs to be done at each stage, who is doing each task, how long each task will take and the costings.
Your architect, designer and contractor will be also able to offer support on what’s required at various stages and how long tasks will roughly take.
For a typical self-build schedule of works click on the link below.
https://www.homebuilding.co.uk/advice/self-build-schedule
It’s also best to be prepared to amend the timetable on the advice of your contractor and builders and the reality of the situation at the time.
The Governments self-build portal is also a good place to source this information and will likely have case studies of projects similar to yours that could help you plan your project.
Most lenders will require full details of the project’s costings and cashflow projections when you submit a self-build mortgage application, so it’s a good idea to start putting a budget plan together as soon as possible.
A typical self-build budget plan will show the cashflow breakdown for each stage of the building process, from purchasing the land to laying foundations to constructing the house.
A lender usually releases funds at six key stages in the project, so you’ll need to create a cashflow budget with funds allocated for each stage.
In addition to the cashflow budget, you should take into consideration costs such as the architect and project management fees, survey planning, finance and other associated fees, buildings warranty insurance and a contingency fund of between 10 to 25%.
This is a good point to start to get quotes from potential contractors and suppliers. It’s worth shopping around and gauging availability too, contractors often have workloads planned out several months in advance.
When choosing your future home, whether building or buying, you’ll want to make sure it’s in a location that suits you, does it have a local school? Are you able to commute to work easily? Are you close to your family?
It’s worth having a look at what’s currently available in your chosen area(s). This can give you an indication on costs and what type of builds are being constructed.
The cost per square metre of land varies per local authority, it’s therefore a good idea to compare areas to see which has the best value for you.
How big an area do you require? How many rooms do you need? How many stories? The bigger and more complicated the project the more expensive it will be.
As well as location, the type of plot you build your house has to be taken into consideration, do you want to purchase land, demolish an existing building to rebuild/ renovate a current property?
It’s worth reaching out to the local authority’s planning department early to see what is and what‘s not viable. Most local authority planning departments offer pre-application advice, but keep in mind that some authorities charge for this service.
Finally, how is the project going to be managed? Will it be a custom or a bespoke design done through a package company, or will you use an architect and contactor or a professional project manager?
Having a clear vision of how you’re going to set out and build your home will help a great deal when starting the project and the lender will likely want to see the plans
As with viewing houses, finding potential plots of land where you can build your property can take patience and time, but taking time to find the right plot of land or property is crucial in getting your self-build project off the ground.
A good place to start searching for suitable land is to use online resources such as PlotSearch. PlotSearch lets you search on building opportunities available in each county. PlotSearch also saves you time by only listing genuine building opportunities where planning permission has been granted.
When looking at sites, focus on a few preferable areas that best suit your needs and price range.
When you’ve got a few areas in mind where you’d like to build a property, it’s a good idea to register your interest on local self-build registers by using the Government’s self-build portal at https://selfbuildportal.org.uk/register-for-a-building-plot/
Be aware that some Local authorities charge for the registration with prices varying, so check in advance.
As part of the Right to Build legislation, local authorities in England must ensure that they have sufficient plots available to meet the demand, and demonstrate that planning permission (or permission in principle) has been granted on these plots within three years. To find out more about this scheme visit https://nacsba.org.uk/campaigns/right-to-build-day/
When searching through your preferred location, you could also visit the area to scope out current build projects and potential opportunities.
Alternatively, you could get in touch with local independent estate agents regarding available opportunities, it’s also worth getting in touch with local surveyors and architects too, as they’ll find out about new plots early.
If the area you’re looking at has high house prices you could also consider buying a poor-quality house to demolish and create a building plot.
Plots suitable for single houses are regularly sold at auction, often as demolition and rebuilds. But bear in mind, if you’re buying a property at auction, you’ll only have 28-56 days to complete on the purchase, meaning you’ll need to have the funds readily available. The seller will also require an upfront deposit of around 10%.
Once you’ve found a potential plot of land to build on, before committing you’ll need to check the suitability of the plot, does it have any current issues, will there be potential issues in the future that could derail your self-build?
A useful source of information is the local council planning department website. Most councils give access to the documents relating to submitted planning applications.
By looking through the records of your site and nearby houses you’ll be able to get a good picture of the sort of designs that achieve planning permission. It might also help uncover any reasons why others get refused.
The plot you’re looking at might have wider potential for developers, it’s therefore wise to look at current local plans to make sure that the land you’re looking at is not already designated for future developments.
It’s highly advisable to get a professional survey of the land done before purchasing.
Some Banks, Building Societies and other lenders will request that a survey is done before they authorise a mortgage.
Only a licensed land survey, produced by a qualified land surveyor, will be able to exactly describe what the area you’re going to purchase includes or entails.
By obtaining a land survey report you’ll be able to identify any issues concerning the land including:
The best place to search for an accredited Land Surveyor is on the RICS, CICES and CIOB websites, with the cost of the survey depending on how much detail you require from it and the size of the land.
When contacting the surveyor, make sure you tell them exactly what you need from the survey, this will ensure that time won’t be wasted and will help the surveyor give you an accurate estimate.
Designing is one of the most exciting stages of building your own home but it’s also one of the most crucial.
We all dream about designing our own home, but unless you have plenty of time and resource to understand the different options available and what’s needed to make a safe and secure structure, it’s probably best to hire a qualified architect.
However, the more you know about the different styles, materials, insulation etc, the more input you’ll be able to give to the architect when briefing the project.
In addition to designing the house, a qualified architect will be able to support the whole project and handle the statutory requirements including the planning permission and building regulations.
RIBA is a good place to start when looking for the right architect for your project https://www.architecture.com/find-an-architect/
You’ll also need check that your prospective architect is registered with the Architects Registration Board (ARB).
It’s a good idea to speak to a few prospective architects about your project but bear in mind that some architects might charge for an initial meeting, often requesting a one-off introduction fee.
In these initial meetings you can discuss your requirements, your budget and whether they can deliver the project or not. You should also negotiate a fee and get confirmation of that fee and what it covers in writing.
The cost of the architectural services will greatly depend on the level of involvement, the location, and the complexity of the project.
There are a few of options available when choosing how to build your dream home.
The most common construction methods are:
Build and Block – This is the most conventional building method in the UK, this system works with an inside layer of concrete blocks, an outer layer of bricks and a layer of insulation in between.
Timber Frame – These types of buildings are becoming very popular with self-builders; timber frames offer a wide range of design options from a traditional brick-faced style to a wooden Scandinavian style.
Steel Frame – While not common in the UK, it’s a popular construction option in the US, steel frames are light weight and high strength but will require you to purchase on a supply and fit basis from a manufacturer so the design could be limited.
There are other alternative methods available from Timber Clad to Styrostone, but the majority of builds constructed in the UK use the Build and Block or Timber Frame construction.
For more information on build types visit https://selfbuildportal.org.uk/construction-methods/
Whether its brick and block, timber frame or other construction options, choosing how your home will be built will depend on a number of factors.
If you’re building a customisable or bespoke home through a package company, the architects, or contractors that the packager users, will usually have their own build style/structural preference, so if you’d like a particular construction option it’s best to find a packager that meets your requirements.
If you’re building a house with an architect and a contractor, they also may require that the project be built using their chosen construction method, so it’s best to keep this in mind when holding initial conversations.
Lastly before choosing a building option, it’s important to check with lenders what construction types, they’ll consider lending on. Many lenders will have a list of acceptable build types.
Before purchasing a piece of land you’ll need to at least obtain Outline Planning Permission from the Local Authority.
By gaining planning permission from the local council, you’re gaining consent to turn a piece of land into a viable building plot.
It’s recommended to get in touch with planning officers at the local council of your self-build project as early as possible to get a strong idea of what will and what won’t be accepted in terms of size, style, and materials.
Most planning departments offer pre-application advice, but be aware, some might charge for this service .
Outline Planning Permission allows for a decision on the general principles of how a site can be developed. The Outline Planning Permission will last 3 years.
Full details of the size, dimensions etc. can be decided at a later date.
However, Full Planning Permission (also known as Detailed Planning Permission) with your detailed proposals will be required before building work can actually start.
When applying for planning permission and building regulation approval, your application will likely need to include:
Home Building have more information on planning permission. Most local authorities will have guidance notes available to help you fill in your statement.
On receiving the application, your local authority will send out an inspector to view the plot and assess the suitability of the project. There will be a charge for this service, details of the charges can be obtained from your local council.
The local council will take into account a number of factors when considering whether your building project is likely to gain planning permission.
These include
The local authority will also release details of your application to local neighbours and the parish council so that any objections can be lodged.
Unfortunately, a new building project could risk upsetting locals living or working in the area.
Neighbours living nearby might be worried about the extra noise, the traffic it might cause, and the effect it could have on the value of their own property.
Once the Local Authority has received these responses, they’ll assess the proposal against their planning policy. The planning officer will then make a decision on whether to approve or decline the application.
If approved, Full Planning Permission will be granted and the work will be allowed to start.
If there’s a problem, the planning officer might try and contact you to resolve it. If it’s refused, then you’ll either need to resubmit an amended proposal or appeal against the decision.
Sometimes conditions of approval will be attached to the planning permission, these will need to be complied with throughout the project.
The council should let you know their decision on your application within 8 weeks.
Please note, your typical straight forward planning application is decided at planning officer level but a more complex application will probably need to go through to a planning committee which could take longer to process.
Instead of making a decision, the planning officer will make a recommendation to the planning committee.
A planning meeting will be held where, you or your agent will be given an opportunity to address the planning committee. The local planning committee will then vote on the final decision.
In addition to having planning permission in place, your building project must comply with building regulations.
All new houses have to be built to the correct set of standards, from the foundations to the electrics, your building must be safe and structurally sound in order to become a home.
Whether your home passes or fails these building regulations will depend on a set of rules.
To find out the building regulations that will apply to your self-build project, get in contact with the building regulations department of the local council, where they’ll be able to let you know which procedures to follow.
More information about the planning and building regulations can be found at the Government Planning Portal website
Please note, the primary responsibility for complying with the regulations belongs to the person carrying out the building work.
This will usually be the firm that employs the builder(s) carrying out the work, though make sure you confirm this in writing at the very beginning.
Ultimately however, it might be you, the owner of the building who’ll receive an enforcement notice if the work doesn’t comply with the regulations.
To get regulations approval, you can either use the building control services of your local authority or an approved inspector.
Inspections of the work will take place at particular stages in the build process (see example below) to ensure regulations are being complied with.
Build stage Notice required
Commencement 2 days
Excavation of foundations 1 day
Foundations laid 1 day
Oversite preparation 1 day
Damp proof course 1 day
Drains testing 1 day
Occupation prior to completion: Within 5 days of occupation
Completion: Within 5 days of occupation
Source https://www.self-build.co.uk/guide-building-regulations/
Ahead of each stage you’ll have to notify the inspector, giving notice for them to inspect the work.
These stages might vary by local authority and the type of build, so check with the building regulations department before arranging an inspection.
Self-Build Mortgages
Before starting to build your home, you’ll need to arrange finance for your project, while you might have saved some funds ready for the project or are able to sell or remortgage an existing property, it’s likely that you’ll need to arrange a self-build mortgage with a lender.
Which mortgage to choose?
As with most residential mortgages, there are lots of different self-build mortgages available with different features that meet different needs.
Unlike a regular mortgage, you’ll receive funds in stages as parts of the build are finished, rather than as a single lump sum.
Build projects are usually split into the following six key stages, where funds are released.
(Different build types and lenders will vary slightly)
With so many factors to consider, it’s best to get in touch with a mortgage adviser or broker/intermediary.
An adviser will be able to provide information on what type of self-build mortgages are available and will recommend a mortgage product which is the right fit for your individual circumstances and project type.
A typical mortgage lender will offer self-build mortgages with a loan to value (LTV) range of 75% – 85%. With an 80% LTV mortgage you’d need to have a deposit of at least 20% of the loan amount before you could apply for that product.
For example, if the estimated cost of your final project were £400,000, you’d need at least a deposit of £80,000 to apply for a mortgage with an LTV of 80%.
With some lenders, you’ll be able to have a mortgage on an interest only basis throughout the build process, this is particularly helpful if you need to live in a rented property.
On completion of the build, you’ll need to convert to a repayment mortgage. It’s best to speak to your mortgage adviser about all the options available once the build has completed.
If you’ve built up enough equity in your home or if you own it outright, you also have the option of re-mortgaging or securing a bridging loan to pay for the plot, funding your build costs or both.
So, when your new home is completed, you’ll be able to sell off your old house to pay for the loan. The advantage of this method is that you’ll be able to stay at your current home throughout the building process.
Get in touch with a mortgage adviser to discuss your available options.
When submitting a self-build application to a mortgage lender you’ll need to provide the following supporting documents:
Planning permission and building regulations approval – With some mortgage lenders, like Loughborough Building Society, Outline Planning Permission is only required for the purchase of the plot, detailed planning permission, building regulation approval and any other necessary statutory or local authority consents will be required before further drawdown after land purchase.
Scaled Architectural Drawings – Detailed specifications and costings must be submitted with scale drawings.
A completed submission sheet
Details of the costings and cashflow projections – Some providers may also want a breakdown of the work and details of who is doing it.
Site Insurance – A solicitor should ensure Site insurance is in in place by completion of the mortgage, at a minimum it should cover:
• £5 million Public Liability
• £10 million Employers Liability
• Contract Works (for the re-instatement value)
• Reinstatement cover for any existing structure.
An NHBC certificate or equivalent warranty – This needs to be applied before building work commences)
You’ll also need to submit documentation to support the application in the same way as with any regular mortgage application, e.g., pay slips, bank statements, ID, proof of rent/mortgage and deposit.
It’s also important to have a healthy credit record and ensure that your outgoings are not exceeding your income.
The lender will be able to tell you what they require.
Once your mortgage application has been approved, the lender will agree a schedule of payment drawdowns.
The lender will arrange a local valuer to inspect the building at each build stage and payment release until the project is complete.
Stamp Duty Fees – When building your own home, you won’t need to pay stamp duty on the house, as no transfer is taking place. You’ll only need to pay stamp duty on the piece of land that you purchase. This is one of the advantages of building your own home.
As owner of the property, you’re responsible for completing the land transaction return and paying the Stamp Duty Land Tax. Your solicitor or Conveyancer will usually handle this for you and send it to HMRC on your behalf.
You can find the most up to date rate of stamp duty payable on the government’s Stamp Duty Land Tax webpage.
Valuation Fees – Mortgage lenders will likely want to conduct a survey and valuation before making a lending decision and can advise you of their fee in advance.
Completion fees
To cover the administration costs of arranging a mortgage, some lenders will ask for a completion fee on some products. If you wish, you can choose to add this fee to your mortgage account (subject to loan to value limits). However, you should consider carefully before adding any fees to your mortgage as these will incur interest charges at the rate of interest applicable to your mortgage account.
Solicitor Fees – These fees will normally depend on the size of your property and will include a Land Registry fee, the solicitor’s own conveyancing fee plus other charges and expenses known as ‘disbursements’.
Planning Fees – These include the fees you’ll need to pay to the local council for planning permission, building regulations approval and inspections. You’ll also have to pay architects fees for their drawings and plans.
Mains Services – If your building plot is not readily connected to mains services like electricity, gas, and water you’ll have to budget for these to be provided.
The further in distance your plot is from the nearest infrastructure, the more costly it will be to provide a connection.
By speaking to suppliers early, you’ll be able to get estimates on how much it will cost to establish a connection and the amount of time it will take.
Once these connections are set up, you’ll start getting charged as soon as you start using these services.
Insurances
It’s crucial that you’re adequately insured when building a house, especially when you consider how risky building sites can be – not just for accidents but for things like theft and vandalism.
It’s therefore important to get a Self-Build insurance policy that provides cover for
When looking for self-build insurance it’s best to get in touch with a dedicated self-build insurance provider like Self Build Zone or Protek for example.
Warranties
A building warranty is essentially an insurance policy for newly built homes.
This warranty will cover the major structural elements of your new home from any physical damage that takes place for a period of ten years. It’ll also cover workmanship and materials such as windows and tiles as well as the electricity and plumbing of the building.
Without a structural warranty or architects’ certificate in place, it’ll be practically impossible to sell your home within the first 10 years. Most mortgage lenders will specify that you’ll need one in place too.
Here is a list of warranty providers with whom you can take out a policy:
LABC (New Home Warranty)
Building Life Plans Limited (BLP, Allianz Guarantee)
After the building work is complete there are a few things, you’ll need to consider before you move into your home.
Obtaining a Completion Certificate
A completion certificate is an official written record showing that the building work has been carried out in accordance with Building Regulations and therefore can now be deemed suitable to live in.
Your main contractor, surveyor, project manager or package house supplier will sign off the property and apply to the local authority for the completion certificate.
You should receive the completion certificate within eight weeks of completion of the building work (as long as it complies with the regulations).
At this point you’ll be able to apply to HMRC for VAT reclaim (See below).
Upon completion, your property will become liable for Council Tax, at some point, you’ll receive a bill that’s backdates to the completion certificate, so be prepared for this expense.
It’s also worth speaking to your lender as they may have more suitable mortgage products for you to switch to once your home is complete.
Reclaiming Value Added Tax
One of the benefits of building your own home is that Self-Build homes are exempt from VAT and therefore you should be able to claim your tax back.
Remember to keep all the receipts of all your purchases because you’ll need these to make a VAT reclaim.
For information on filling in a VAT reclaim visit https://www.gov.uk/vat-returns/fill-in-your-return
Arrange a handover
Before moving in your property, it’s a good idea to complete a handover with your builder, so they can show you how to use your new home, including details on how each appliance works. This is also an opportunity to make sure everything has been completed according to your plans and that there are no remaining issues.
Remember to ask for manuals for each appliance, you may not be able to remember everything during the handover.
Arranging a snagging inspection
When building a home, there’ll always be small defects that need sorting out along the way.
While most of these will be dealt with during the build, some elements will only be picked up after completion.
It’s therefore a good idea to get a snagging inspection done soon after completion
With a snagging inspection you and your contractor (and architect if possible) will do a walkaround the house, noting defects as you go.
This is your chance to have genuine faults corrected – It isn’t a means to get the builder to do additional work for free.
Another option is to get a professional snagging survey done; however this will incur an extra cost.
The majority of builders will hold back around 2.5%-5% of the agreed contract price to cover remaining snagging issues after completion.
Post codes
Unless there was a previous property on your site, your new home will come with a new address.
To get your new address, your builder will need to contact the local council in order to get the new address and post code created. The post code will go live when Royal Mail are informed that mail can be delivered to it.
Be prepared to have your post and parcels redirected elsewhere while businesses update their databases.
It may also take a while for Satellite Navigation devices to be updated, so be prepared to give people directions to your home from different locations.
Remember to also get a door number for your new property!
Order bins for your property
Get in touch with your local council to arrange to have wheelie bins delivered to your new home and find out which days your bins will be collected, or you could be left with a big pile of unwanted rubbish.
Moving into your property
At last, you’re ready to move into your dream home.
A new home, especially one you’ve built is exciting, but the moving process can be stressful, it’s therefore best to have a plan in place.
To help, we’ve put together a list of things you’ll need to consider at various stages leading up to the day you move.
Four weeks before moving
Two weeks before moving
One week before moving
Day before moving
Finally, you’ll be able to move and enjoy living in your own dream home or even sell/let it out for another family to enjoy.
For more information on getting a self-build mortgage with the Loughborough visit https://www.theloughborough.co.uk/mortgages/build-your-own-home or get in touch with our direct team by telephone on 01509 389282 or by email at [email protected]
The post Planning to build your own home appeared first on The Loughborough Building Society.
]]>The post First Time Buyer FAQ’s appeared first on The Loughborough Building Society.
]]>Buying your first home is exciting but it can also be quite daunting, after all it’s one of the biggest purchases you’ll ever make.
To make things easier for you, we’ve put together a guide that helps answer the most frequently asked questions of people buying their first home.
A mortgage is a loan from a bank or building society that helps you buy a home.
Mortgages are most often repaid in monthly instalments, with your lender charging interest on the amount you’ve borrowed. The higher the interest rate the more you’ll pay back each month and indeed over the term. That said, it’s not all about the rate you pay but also about the terms of the mortgage you take. A fully qualified Mortgage Adviser will make a recommendation on the best mortgage to suit your needs and circumstances.
Mortgage payments on average are paid over a period of 25 years, although you can take out mortgages with longer or shorter terms. The quicker you pay off your mortgage, the less interest you’ll pay overall.
The mortgage application process can seem quite complicated, especially if you’ve never done it before, however a mortgage advisor will be able to support you throughout the process.
Not only will they be able to help you find the most appropriate deal for your circumstances, but they’ll be able to check your finances to help make sure that you’ll meet the lender’s lending and affordability criteria. They’ll also help you complete the paperwork and help you take all the costs and features of the mortgage into account.
The majority of mortgages in the UK are offered by financial organisations such as banks and building societies.
Those looking for a mortgage can source one from a bank or building society directly or through a mortgage broker.
The deposit is a percentage of the property’s purchase price or valuation (whichever is the lower), so if you’re buying a house for £150,000 a 10% deposit would be £15,000 that you’d need to have from your own resources.
The deposit is usually from your own savings or perhaps a gift from a family member but in some circumstances, you may be able to borrow 100% of the purchase price/value.
In the example shown above, you would then need a mortgage of the remaining 90% of the purchase price/value (£135,000) from your mortgage lender.
The loan amount compared to the purchase price/value is what’s often referred to as the Loan To Value (LTV) ratio.
Your monthly payments would then go toward paying off the amount you owe the mortgage lender plus interest.
When buying a house for the first time, you’re likely to be looking at a 90-95% Mortgage deal. This means you’ll need to save a deposit of at least 5-10%.
However, the bigger the deposit you put down, the more choice you’ll have from products on the market.
Pros:
Cons:
An Agreement in Principle (AIP) or a Decision in Principle (DIP), is a written estimate from a mortgage lender of the amount that you may be able to borrow.
AIP’s/DIP’s while not essential, are useful because they give you an indication of the amount you’ll be able to borrow from your lender and some Estate Agents will insist you have one before they’ll accept your offer on a property.
While an AIP does indicate how much you can borrow, it’s not a mortgage offer so you’ll still need to make a formal application to the lender once your offer has been accepted.
Once the lender has your application, they will start to underwrite which means they’ll need to confirm your income and outgoings, credit status and value the property as a minimum.
The information below covers some of the factors that may affect the lenders underwriting decision.
A change in personal circumstances
A change to your personal circumstances such as a reduction in your admissible income could affect how much you’re able to borrow.
Starting a new job and still being in a probationary period could also affect the lenders decision.
The ability to lend on the property
The lender’s decision will also depend on whether they consider the property you’re interested in to be suitable for them to lend against. This will depend on the criteria of each lender.
It’s therefore worth checking with your lender whether they’re comfortable with the property type and location before putting an offer to the agent/seller.
When applying for a mortgage, the lender will need to be satisfied that you’ll be able to meet your monthly mortgage repayments.
To check whether you can make these payments a lender will assess affordability based on income and outgoings. This will involve the lender reviewing information you provide to them such as payslips, P60s and bank statements.
Check your credit report.
A mortgage lender will usually check your credit report to find out if you’ve met your financial obligations so far, before accepting the mortgage.
Your credit report lists details from any accounts you’ve had open over the past six years, including credit cards, loans, and overdrafts.
The repayment of your cards, loans etc. could affect your overall credit file, with even one missed payment having a negative impact. It’s therefore a good idea to check your credit history and make sure you make your payments for the correct amount and on time for each of your credit commitments, before your lender makes a check.
Please note, every credit check from a lender is also recorded and will leave a mark on your credit history so you might want to limit the number of checks that are carried out.
You can check your credit report with credit reference agencies such as Experian, Equifax and TransUnion to see what information the lender might see.
Too many credit applications
Applying for too much credit over a short period of time can appear as a sign of financial stress, so it’s best to avoid taking out new credit agreements for at least a year before you apply for a mortgage. (Credit requests stay on your file for at least two years, though the impact on your file diminishes over time)
If you’re experiencing money worries, there is plenty of free and confidential advice out there to help you from charities such as:
Payplan – 0800 280 2816 www.payplan.com
National Debtline – 0808 808 4000 www.nationaldebtline.org
Advice UK – You’ll need to locate the number of your local advice centre from the phone book or via this link www.adviceuk.org.uk
Step Change Debt Charity – 0800 138 1111 www.stepchange.org
Citizens Advice Bureau – You’ll need to locate the number of your local bureau from the phone book or via this link www.citizensadvice.org.uk
Please be aware that there are companies that charge a fee for managing your debts. If you intend to use the services of one of these companies, you should find out about any charges which may be applicable and fully understand any agreement terms.
Payday loans
Any payday loans you’ve taken out over the past six years will be listed on your file, even if you’ve paid it off on time.
These payday loans could be detrimental to your mortgage application as your lender may question your ability to live comfortably on your income.
This won’t necessarily mean you’ll get turned down for a mortgage as different lenders will view payday loans differently.
Not being registered to vote
You can help improve your credit file by registering to vote, as your lenders will be able to confirm who you are and where you live using the electoral register.
It’s quick and easy to do this online at the Electoral Commission or through your local council.
Having a poor credit file will not automatically rule you out for mortgage acceptance, but it could affect your chances.
Your deposit is too small
A small deposit amount might affect your chances of being accepted for a mortgage by a lender, however there are some lenders who will accept 5%-10% or fewer deposits so it’s worth searching for them.
You could however consider saving up for a larger deposit, using government schemes or getting help from your family by taking out a family assist mortgage.
Your admissible income is low
Admissible income is the amount available once your credit commitments have been deducted from your income, so the amount left over that’ll be needed to meet your mortgage payments and living expenses.
A responsible lender will make calculations to this effect and may find the income is insufficient, if so, you could try looking for a smaller mortgage, get help from one of the government home buying schemes or get help from your family through a family assist mortgage.
Not Matching the Lenders Criteria
Each mortgage lender has a different set of underwriting criteria (The standards by which decisions are made)and takes into account a number of factors when assessing mortgage applications.
Some mortgage lenders when underwriting your application might decline your application due to their set criteria.
i.e. the property or location of your mortgage application might be out of their lending remit.
Therefore it’s worth checking that the criteria matches with the lender before applying for a mortgage.
If your mortgage application is unsuccessful, it’s best to find out and resolve why and fixing whatever you can before you apply again.
Before applying again it’s a good idea to get help from a mortgage adviser or broker, who’ll be able to assess your financial and credit information and find a mortgage that’s more likely to fit the criteria.
Proof of ID –
Proof of Income –
If you’re in PAYE employment
If you are self-employed
If you have other/additional sources of income:
Proof of Expenses (Outgoing expenses) –
It’s a good idea to have multiple copies of all these documents ready for the mortgage application process.
In addition to the mortgage deposit and monthly repayments, there are other costs involved when taking out a mortgage that you need to be aware of, these include:
Application/Completion fee (where applicable)
This is a fee charged by the lender. Sometimes, you can add this fee to your mortgage account (subject to loan to value limits). However, you should consider carefully before adding any fees to your mortgage as these will incur interest charges and may result in you paying more overall.
Solicitor Fees
These fees will normally depend on the size of the property and will include a Land Registry fee, the solicitor’s own conveyancing fee plus other charges and expenses known as ‘disbursements’. It’s worth shopping around for quotes.
Search fee
If you’re buying a property, you will need to pay local search fees. A search provides information about your property and immediate neighbourhood, which may affect your decision to purchase the property. Your solicitor will normally arrange for these to be carried out.
Higher lending charge
A Higher Lending Charge normally applies if you want to borrow more than 80% of the property’s value and provides indemnity insurance to protect the lender against any potential future loss if, for example, you go into arrears with mortgage payments or your property is repossessed. The Higher Lending Charge will normally be provided free by The Loughborough.
Valuation Fee
Before the lender can make a lending decision, they’ll need to value your property. There are three types of valuation available:
Standard/Basic Valuations
This is a basic valuation of the property and is for the lender’s benefit only. It enables the lender to decide whether the property is suitable for lending purposes.
Homebuyers report
This report is a more detailed inspection of the property than a standard valuation. You’ll receive a report on the condition of the property, stating any repairs or defects that need attention.
Full Building Survey
This survey is the most comprehensive type of report and is a thorough and complete inspection of the property and its structure.
Stamp duty is a tax payable by the purchaser of a property. It’s collected by the solicitor/conveyancer prior to the sale completing and is charged at various rates.
However, first-time buyers in England and Northern Ireland do not have to pay stamp duty on the first £425,000 of property value, provided the total purchase price is £625,000 or less.
You can find the most up to date rate of stamp duty payable on the government’s Stamp Duty Land Tax webpage.
Yes, most lenders will let you overpay by 10% per year, check with your lender first before making an overpayment, as you could be subject to Early Repayment Charges if you overpay during the product period.
An unexpected circumstance could lead to you falling behind with your mortgage payments, this often leads to stress and worry that a lender will repossess your home.
Contrary to that belief, lenders will want to help you if you have a problem making mortgage payments and repossession is a last resort.
Therefore, its best that that you get in touch with your mortgage lender as soon as possible if you’re unable to make your monthly payments or experiencing financial difficulty.
For further support, The Building Societies Association has a practical guide to help those who can’t pay their mortgage.
If you’re struggling with debt, there are also a number of independent charities that help people get out of debt by offering free and impartial advice and work with you and your creditors to come to an agreement.
Debt charities include:
Saving for a deposit as a new buyer can be difficult, especially if you’re paying monthly rental payments.
However with help from Government schemes and savings accounts there are ways to help you save for your deposit.
Please be aware that our FAQs do not cover all aspects of our lending criteria, for further information or guidance please use our online contact form or telephone us on 01509 610707.
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]]>To help give you more information and guidance on our Family Deposit mortgages, we’ve put together answers to the following Frequently Asked Questions.
The principle behind The Loughborough Family Deposit mortgage is simple. With the help of parents, a step-parent or grandparents you could apply for a mortgage even if you don’t have a deposit.
The mortgage comes with a range of options that mean family members with a variety of circumstances could make it possible for you to get onto the property ladder.
The Family Deposit mortgage is available to 18+ year old UK residents throughout England and Wales who have sufficient income to afford the mortgage repayments.
We will lend up to 100% of the value of the property, subject to a maximum of £300,000 (£90,000 minimum). The actual amount you can borrow will depend on your income after the deduction of household expenses and other financial commitments.
Your family member(s) are able to support you by providing security in the form of Cash, Collateral or both.
1. Security through savings: this allows the family member(s) to use their savings to help you (the buyer) without having to ‘give’ the money to you. The family member(s) deposit cash in a specifically designed savings account with the Society. The cash deposited must be for an amount equal to 20% of the value of the property to be purchased.
2. Security through property (collateral): this allows the family member(s) to help even if they don’t have spare cash but do have equity in their home. The family member agrees to some of the equity in their residential property being used as security. They would do this by giving what is called ‘a legal charge’, for an amount of equity equal to 20% of the value of the property to be purchased, which means the Society would have specific legal rights over the family member’s residential property.
3. Or, a combination of options 1 and 2 is available. The minimum amount of each security option is £5,000.
The security noted in the examples above can be used to make up any shortfall (loss) that arises if the property is sold
Like any other mortgage the property is owned by the borrower. Family members providing support have no rights to the property.
This may be possible and our mortgage advice team can discuss this option with you. All family members providing support would need to agree how the deposit security is split between them and they would all be required to take separate independent legal advice.
Yes, there are no restrictions on the number of family members that can be helped in this way.
You can help more than one family member with cash as security; however, it will be necessary to have a separate Assisted Purchase Deposit Guarantee Account for each cash security.
Helping more than one family member using collateral security against property would need separate mortgage collateral deeds for each deposit security being provided. The total of all existing mortgages and all mortgage collateral deeds is strictly limited to a maximum of 75% of the family member’s residential property value.
Yes.
No. Annual mortgage statements will only be provided to the borrower because the family member isn’t responsible for maintaining the monthly mortgage payments. The family member will, however, be notified if mortgage payments are not made as required.
A family member who provides cash security needs to be fully aware that the cash will be called upon to make up any shortfall if the property is sold in the event of default and the proceeds are less than the mortgage debt plus costs. Where property is provided as security the family member’s residential property may be repossessed by us to recover the debt. Liability is limited to the amount of the security.
If security is provided by more than one family member, the liability to make up any shortfall will be divided proportionately by reference to the value the respective securities bear to the total value of all additional security linked to the Family Deposit Mortgage. For example, if the total guarantee provided was £40,000 and family member A provided £30,000 (75%) and family member B provided £10,000 (25%) and the property was repossessed and sold at a loss of £20,000 then family member A would lose £15,000 (75%) and family member B would lose £5,000 (25%).
All family members will be required to take independent legal advice before the borrower is committed to the purchase.
The existing property is sold and the mortgage repaid. Providing the sale proceeds are sufficient to repay the outstanding debt in full, collateral security on property is released and security in the form of cash is returned to the family members.
Early Repayment Charges will apply if this occurs during the product term. Thereafter, the Early Repayment Charges applicable to any subsequent product would apply unless that product term had also come to an end.
The release conditions as detailed in the Security Deposit Agreement (for cash security) or the Collateral Charge document (for a collateral security) must be satisfied. In summary, the family member will be released if;
a) The mortgage debt under guarantee is repaid in full; or
b) A formal request is made on the basis that the release conditions set out in the Agreement and repeated below have been satisfied in full;
I. The borrower is not in breach of their mortgage terms and conditions; and
II. The borrower has made all monthly mortgage payments in full when due in the previous six months; and
III. The Society is satisfied, acting as a reasonable and prudent lender, that the borrower is able to afford to continue to make monthly payments and discharge their obligations under the mortgage for the remainder of its term; and
IV. The amount of the mortgage debt under guarantee does not exceed 75% of the open market value of the charged property based on the valuation undertaken at that time by the Society’s valuer i.e. the mortgage balance must be no more than 75% of the valuation for mortgage purposes at the time the release request is received.
The borrower is responsible for ensuring payments are made when due and for the full mortgage amount outstanding, plus interest, costs and expenses. The Loughborough will ensure that family members receive communications relating to the mortgage account and are notified if payments are not kept up to date.
If the property is repossessed and sold for an amount less than the balance of the mortgage account including fees and charges, the family member will be liable for the shortfall up to the limit of the security provided.
If a cash security deposit has been provided, the shortfall will be recovered from the Assisted Purchase Deposit Guarantee Account. If collateral security has been provided, the shortfall will be recovered from the proceeds of the sale of the family member’s residential property unless the shortfall can be met through other means.
The Loughborough will assume power of attorney in accordance with the Security Deposit Agreement (for cash security) or the Collateral Charge document (for a collateral security). The family member’s estate has the option of paying off the security liability and providing that the remaining release conditions are met then the security may be relinquished. This will be explained to you further by your independent legal adviser.
It is a condition of the mortgage that family members get independent legal advice to ensure they understand the commitment they are making and the risks involved before giving us a legal charge over cash and/or property. To avoid a conflict of interest, family members can’t use the same solicitor who is conducting the conveyancing on the linked mortgage but it can be another solicitor from the same firm.
Please be aware that our FAQs do not cover all aspects of our lending criteria, for further information or guidance please use our online contact form or telephone us on 01509 610707.
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]]>The minimum loan we’ll consider is £25,000 and the maximum is £500,000. This is subject to the loan equalling no more than 60% of the valuation or purchase price of the property (whichever is the lower). This of course will depend on whether the amount proves to be affordable based on an assessment of your income and outgoings.
We can use pension income, self-employed income, employed income, investment income or a combination of these.
We’ll consider your application taking into account your ability to pay the mortgage both now and in the future by looking at your current income and projections of the income you’ll have in retirement.
Yes.
Yes. There are a number of reasons you may wish to borrow money and we’ll consider lending for the purchase of a car, caravan, the deposit on another property, assisting family members, care home fees and consolidating other financial commitments.
Yes, it is possible to borrow money to make improvements to your property whether that means taking a mortgage out on the property that you currently own outright or by moving your mortgage to us and borrowing more than your current mortgage amount to pay for the improvements.
For any borrower of any age, we’d encourage you to take life assurance which would pay the mortgage off in full or in part at the time of death. However, if there was no life assurance in place, the mortgage debt could be paid from the sale of the property.
When considering the application we would assess the affordability of each applicant should they survive the other, perhaps pension income would transfer to the survivor or the survivor would have enough income in their own right to afford the mortgage payments. If this wasn’t the case, we’d ask you to take legal advice before entering into the mortgage contract as it would be the obligation of the surviving borrower to continue to pay the monthly mortgage payments. You may consider the possibility of adding another family member to the mortgage or selling the property at this point.
Yes of course. We have qualified Mortgage Advisors who’d be delighted to explain borrowing into retirement in more detail for you and answer any further questions you may have. You can either speak to them on the telephone by calling 01509 389282 or if you prefer, you could arrange to speak to them in person.
Please be aware that our FAQs do not cover all aspects of our lending criteria, for further information or guidance please use our online contact form or telephone us on 01509 610707.
The post Borrowing into Retirement FAQ’s appeared first on The Loughborough Building Society.
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