What's the cheapest way to borrow money to buy land to build on?
Posted on 11 January 2017 by Mrs Taylor
I wish to raise £80K for approx 8 months, in order to buy a piece of land and build on it. The builder will cover all building costs and the land has planning permission already. I have a £130k mortgage on my house and its value is approx 280K. What is the cheapest way to borrow this amount of money for this length of time?
Using your existing mortgage to borrow money to buy land
Normally you would to do a self build mortgage which would also include funds to cover the build cost, however your situation sounds a little more unusual if the builder is paying for the cost of the build. This may mean a lender will look at the loan as development finance, which is slightly more expensive.
How can I do this?
If you are only raising the £80,000 for the cost of the land then, subject to lenders affordability and standard criteria you could raise the money on your existing mortgage. This could be done by way of a first charge remortgage to a new lender or second charge and keeping the £130,000 with your current provider.
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