I wrote a significant number of news item pieces of this kind for specialist mortgage lender Harpenden Building Society as part of a feasibility project related to establishing a regular newsletter for its broker market audience. Newsletter news item for Harpenden Building Society
New Harpenden Premium Self-Build Mortgage Offers Edge on Rates and Flexibility.
“We have a sort of ‘plan’. We were wondering whether you could help us with a mortgage?”
“A very interesting ‘opportunity’ has come up… and we’re looking for a mortgage to make it happen.”
Like most brokers, you’ll be well familiar with requests from clients for help in making somewhat off-beat ‘plans’ and ‘opportunities’ come to life.
From self-build dream homes to imaginative asset re-deployments.
Although the details of the kind of plan in question will vary, such schemes will typically involve carrying out some kind of development work on land or to a property that the client already owns, or has inherited, or is purchasing specifically to take advantage of its opportunity.
The plan may be as straightforward as acquiring a piece of land on which to self-build the home of a client’s dreams.
Equally, however, it may involve creating a new place for the client to live while also providing some additional financial benefit in the form of long term rental income, or additional residencies which can be sold off at a profit.
Where to take clients with a self-build or similar project.
While projects like this are not so far outside of the mainstream of mortgage lending, finding competitive financing that will enable your client to get on with putting their plan into action can be tricky.
You may be perfectly happy to listen and put your expertise to work on their behalf, but your client is likely to be keen for things to happen quickly, with no real concern their plan being unconventional.
Because of this, our newly launched self-build product, the Harpenden Building Society Premium Self-Build Mortgage, is already attracting strong interest amongst brokers.
The HBS Premium Self-Build Mortgage. What is it designed for?
HBS’s new Self-Build Mortgage has been designed to provide a high level of versatility in situations in which clients are seeking medium term financing to enable them to carry out a self-build, or similar, development plan along the lines described.
- For example, a client might have the chance to acquire (or could perhaps have inherited) a plot of land for which they have approval to knock down an old bungalow and build two houses; or a plot on which there is currently a bungalow but for which they have obtained permission to add a second floor.
- Or imagine a client who already owns one apartment in a house which had been converted in the past into two apartments. Say he or she is suddenly offered the opportunity to purchase the other lease and turn the property back into a single residence which, once refurbished, could provide both a more desirable home for now, as well as a substantial asset for the future.
- Equally, you could be looking at a re-development in the other direction. A client still occupying a larger property after their family has all moved on, might hatch a plan to reconfigure, creating a smaller personal residence, as well as one, or perhaps even two, apartments capable of producing retirement income.
“There is no shortage of clients out there with the ideas, imagination and ambition to self-build a home, or to undertake a small scale development that will provide them with a new home while also delivering some other benefit in terms of assets,” says our Business Development Manager, Graeme Aitken. “We hear from brokers all the time about the importance of being able to accommodate the needs of clients wanting to finance this kind of project. It’s a worthwhile section of the market, which calls for the kind of case by case consideration that the Harpenden specialises in, and for a product designed with this kind of use in mind.”
Higher LTV and competitive variable rate.
The new Harpenden Building Society Premium Self-Build product is the solution to the need outlined by Graeme.
Designed for this kind of situation, as well as for similar projects (such as barn conversions, for example), it allows for financing of up to £2m, providing the required planning permissions have already been granted.
The mortgage can be arranged for a term of up to 3 years. In the majority of cases, this allows for the completion of either a new build or a more complex redevelopment project. The product has a variable rate, currently sitting at 4.39%.
The Premium Self-Build product’s maximum LTV of 75% makes it additionally useful for you as a broker. 75% is a higher LTV than many competitive products in the market, including our own standard Self-Build mortgage product, and so makes borrowing a required sum realistic for an extra band of applicants.
With regard to the intended usage of the redeveloped site or building, the condition is that at least 50% of the resulting floor area must be for residential occupation by the borrower. This applies whether the site is being developed into multiple residences, or into a mix of residential and commercial use space.
Where multiple residences are being built from new, or are being created as part of a redevelopment, the Premium Self-Build product permits no more than three units in total on a single Title. In any case, the residence to be occupied by the borrower must account for at least 50% of the development’s total floor space.
There is no minimum period for which the borrower must have owned the land or property when applying for the product.
Flexible options on draw down.
The Premium Self-Build Mortgage has a number of further features making it a great option for clients needing to finance this kind of project.
“If the borrower owns the land to be built on,” explains Graeme Aitken, “we can release up to 75% of the loan sum up front, before work commences.”
Even in cases where this is not applicable, the product takes a usefully flexible view on draw down.
Instead of working on an ‘arrears stage payments’ model, in which each phase of a project must be completed and inspected before the finance covering that stage is released (creating the need for clients to self-finance or bridge the cost of the work for a period of time), the Premium Self-Build Mortgage uses a form of ‘advance stage payments’.
Funds can be released in advance of each new phase commencing, providing a re-inspection of the site shows a suitable increase in its value since the release of the previous tranche. Combining this with the up-front advance available to clients developing on land which they own, it becomes possible for all funds to be available before work on any stage commences.
Additional versatile features of the Premium Self-Build.
Further features and conditions add to the versatility that the Premium Self-Build product offers brokers looking for suitable solutions for self-build clients.
Borrowers face no upper age limit, providing they can demonstrate the ability to support the borrowing.
Maintenance and other income streams can be grossed up, and most income streams achieved in the UK can be considered. Both the self-employed and contract workers (even those working on short term contracts so long as they can demonstrate a year’s track record) are eligible.
The Harpenden does not credit score applicants, instead using manual underwriting and working closely with you as the broker in processing each application.
In terms of the actual property to be developed, depending on intended usage, properties with two kitchens will be considered/ The same goes for properties with an annexe or similar component which the applicant plans to use for family or friends, or intends to let out on an AST or as a holiday let. (In cases in which a part of the development is to be let, this must again account for less than 50% of the total floor area.
Both traditional and modern properties will be considered, including Grade II Listed and thatched properties.
The Harpenden’s effective response to the self-build market.
“The Harpenden specialises in providing brokers with solutions for clients who have circumstances that need a lender to make a thorough, individual assessment”, explains Graeme Aitken. “The Premium Self-Build Mortgage fits right in with this. We’ve understood the market. There are lots of clients wishing to reconfigure a property they already own to unlock equity or create income, or to unlock potential from a property being purchased specifically for that purpose. We have responded with a product that will let brokers get back to these clients quickly with, in the majority of cases, a helpful and positive decision. We’re delighted by the warm welcome it’s receiving from the industry.”
Can our Premium Self-Build product help you?
Our Premium Self-Build Mortgage gives you a new, carefully designed product option with which to tackle client applications of kind.
Please download the rate card, which contains comprehensive product details.
As always, you can view the rates for other specialist HBS products here, and if you require further information of any kind, your Harpenden BDM is ready to help.
Just get in touch.
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