Posted on 11 January 2013 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 coverall build costs. 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. Thanks.
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.
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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